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SECRETS 

OF THE 

FEDERAL RESERVE 




by 

EUSTACE MULLINS 




MAYBE THAT WILL HELP YOU «» . 
FOLKS SEE THE. TjF%UJ~J/// f ^ 

Restore the American Republic's Constitution ! 

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The London Connection 

By 

Eustace Mullins 

Dedicated to two of the finest scholars of the twentieth century 

GEORGE STIMPSON 

and 

EZRA POUND 

who generously gave of their vast knowledge to a young writer to guide him in a 
field which he could not have managed alone. 

ACKNOWLEDGEMENTS 

I wish to thank my former fellow members of the staff of the Library of Congress 

whose very kind assistance, cooperation and suggestions made the early versions 

of this book possible. I also wish to thank the staffs of the Newberry Library, 

Chicago, the New York City Public Library, the Alderman Library of the 

University of Virginia, and the McCormick Library of Washington and Lee 

University, Lexington, Virginia, for their invaluable assistance in the completion 

of thirty years of further research for this definitive work on the Federal Reserve 

System. 



About the Author 



Eustace Mullins is a veteran of the United States Air Force, with thirty-eight 
months of active service during World War II. A native Virginian, he was 
educated at Washington and Lee University, New York University, Ohio 
University, the University of North Dakota, the Escuelas des Bellas Artes, San 
Miguel de Allende, Mexico, and the Institute of Contemporary Arts, Washington, 
D.C. 

The original book, published under the title Mullins On The Federal Reserve, was 
commissioned by the poet Ezra Pound in 1948. Ezra Pound was a political 
prisoner for thirteen and a half years at St. Elizabeth's Hospital, Washington, D.C. 
(a Federal institution for the insane). His release was accomplished largely 
through the efforts of Mr. Mullins. 

The research at the Library of Congress was directed and reviewed daily by 
George Stimpson, founder of the National Press Club in Washington, whom The 
New York Times on September 28, 1952 called, "A highly regarded reference 
source in the capitol. Government officials, Congressmen, and reporters went to 
him for information on any subject." 



Published in 1952 by Kasper and Horton, New York, the original book was the 
first nationally-circulated revelation of the secret meetings of the international 
bankers at Jekyll Island, Georgia, 1907-1910, at which place the draft of the 
Federal Reserve Act of 1913 was written. 

During the intervening years, the author continued to gather new and more 
startling information about the backgrounds of the people who direct the Federal 
Reserve policies. New information gathered over the years from hundreds of 
newspapers, periodicals, and books give corroborating insight into the 
connections of the international banking houses.* 

While researching this material, Eustace Mullins was on the staff of the Library of 
Congress. Mullins later was a consultant on highway finance for the American 
Petroleum Institute, consultant on hotel development for Institutions Magazine, 
and editorial director for the Chicago Motor Club's four publications. 



* The London Acceptance Council is limited to seventeen international banking houses authorized 
by the Bank of England to handle foreign exchange. 



ABOUT THE COVER 

The cover reproduces the outline of the eagle from the red shield, the coat of arms 
of the city of Frankfurt, Germany, adapted by Mayer Amschel Bauer (1744-1812) 

who changed his name from Bauer to Rothschild ("Red Shield"). Rothschild 

added five golden arrows held in the eagle's talons, signifying his five sons who 

operated the five banking houses of the international House of Rothschild: 

Frankfurt, London, Paris, Vienna, and Naples. 



Table of Contents 



Chapter One Jekyll Island 1 

Chapter Two The Aldrich Plan 10 

Chapter Three The Federal Reserve Act 16 

Chapter Four The Federal Advisory Council 40 

Chapter Five The House of Rothschild 47 

Chapter Six The London Connection 63 

Chapter Seven The Hitler Connection 69 

Chapter Eight World War One 82 

Chapter Nine The Agricultural Depression 114 

Chapter Ten The Money Creators 119 

Chapter Eleven Lord Montagu Norman 131 

Chapter Twelve The Great Depression 143 

Chapter Thirteen The 1930 's 151 

Chapter Fourteen Congressional Expose 171 

Addendum 179 

Appendix 1 181 

Biographies 186 

Bibliography 193 

Index 197 



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Foreword 



In 1949, while I was visiting Ezra Pound who was a political prisoner at St. 
Elizabeth's Hospital, Washington, D.C. (a Federal institution for the insane), 
Dr. Pound asked me if I had ever heard of the Federal Reserve System. I 
replied that I had not, as of the age of 25. He then showed me a ten dollar bill 
marked "Federal Reserve Note" and asked me if I would do some research 
at the Library of Congress on the Federal Reserve System which had issued 
this bill. Pound was unable to go to the Library himself, as he was being held 
without trial as a political prisoner by the United States government. After 
he was denied broadcasting time in the U.S., Dr. Pound broadcast from Italy 
in an effort to persuade people of the United States not to enter World War 
II. Franklin D. Roosevelt had personally ordered Pound's indictment, 
spurred by the demands of his three personal assistants, Harry Dexter 
White, Lauchlin Currie, and Alger Hiss, all of whom were subsequently 
identified as being connected with Communist espionage. 

I had no interest in money or banking as a subject, because I was working on 
a novel. Pound offered to supplement my income by ten dollars a week for a 
few weeks. My initial research revealed evidence of an international banking 
group which had secretly planned the writing of the Federal Reserve Act and 
Congress' enactment of the plan into law. These findings confirmed what 
Pound had long suspected. He said, "You must work on it as a detective 
story." I was fortunate in having my research at the Library of Congress 
directed by a prominent scholar, George Stimpson, founder of the National 
Press Club, who was described by The New York Times of September 28, 
1952: "Beloved by Washington newspapermen as 'our walking Library of 
Congress', Mr. Stimpson was a highly regarded reference source in the 
Capitol. Government officials, Congressmen and reporters went to him for 
information on any subject." 

I did research four hours each day at the Library of Congress, and went to 
St. Elizabeth's Hospital in the afternoon. Pound and I went over the previous 
day's notes. I then had dinner with George Stimpson at Scholl's Cafeteria 
while he went over my material, and I then went back to my room to type up 
the corrected notes. Both Stimpson and Pound made many suggestions in 
guiding me in a field in which I had no previous experience. When Pound's 
resources ran low, I applied to the Guggenheim Foundation, Huntington 
Hartford Foundation, and other foundations to complete my research on the 
Federal Reserve. Even though my foundation applications were sponsored by 
the three leading poets of America, Ezra Pound, E.E. Cummings, and 
Elizabeth Bishop, all of the foundations refused to sponsor this research. I 
then wrote up my findings to date, and in 1950 began efforts to market this 
manuscript in New York. Eighteen publishers turned it down without 
comment, but the nineteenth, Devin Garrity, president of Devin Adair 



Publishing Company, gave me some friendly advice in his office. "I like your 
book, but we can't print it," he told me. "Neither can anybody else in New 
York. Why don't you bring in a prospectus for your novel, and I think we 
can give you an advance. You may as well forget about getting the Federal 
Reserve book published. I doubt if it could ever be printed." 

This was devastating news, coming after two years of intensive work. I 
reported back to Pound, and we tried to find a publisher in other parts of the 
country. After two years of fruitless submissions, the book was published in a 
small edition in 1952 by two of Pound's disciples, John Kasper and David 
Horton, using their private funds, under the title Mullins on the Federal 
Reserve. In 1954, a second edition, with unauthorized alterations, was 
published in New Jersey, as The Federal Reserve Conspiracy. In 1955, Guido 
Roeder brought out a German edition in Oberammergau, Germany. The 
book was seized and the entire edition of 10,000 copies burned by 
government agents led by Dr. Otto John. 

The burning of the book was upheld April 21, 1961 by judge Israel Katz of 
the Bavarian Supreme Court. The U.S. Government refused to intervene, 
because U.S. High Commissioner to Germany, James B. Conant (president of 
Harvard University 1933 to 1953), had approved the initial book burning 
order. This is the only book which has been burned in Germany since World 
War II. In 1968 a pirated edition of this book appeared in California. Both 
the FBI and the U.S. Postal inspectors refused to act, despite numerous 
complaints from me during the next decade. In 1980 a new German edition 
appeared. Because the U.S. Government apparently no longer dictated the 
internal affairs of Germany, the identical book which had been burned in 
1955 now circulates in Germany without interference. 

I had collaborated on several books with Mr. H.L. Hunt and he suggested 
that I should continue my long-delayed research on the Federal Reserve and 
bring out a more definitive version of this book. I had just signed a contract 
to write the authorized biography of Ezra Pound, and the Federal Reserve 
book had to be postponed. Mr. Hunt passed away before I could get back to 
my research, and once again I faced the problem of financing research for 
the book. 

My original book had traced and named the shadowy figures in the United 
States who planned the Federal Reserve Act. I now discovered that the men 
whom I exposed in 1952 as the shadowy figures behind the operation of the 
Federal Reserve System were themselves shadows, the American fronts for 
the unknown figures who became known as the "London Connection." I 
found that notwithstanding our successes in the Wars of Independence of 
1812 against England, we remained an economic and financial colony of 
Great Britain. For the first time, we located the original stockholders of the 
Federal Reserve Banks and traced their parent companies to the London 
Connection. 



This research is substantiated by citations and documentation from 
hundreds of newspapers, periodicals and books and charts showing blood, 
marriage, and business relationships. More than a thousand issues of The 
New York Times on microfilm have been checked not only for original 
information, but verification of statements from other sources. 

It is a truism of the writing profession that a writer has only one book within 
him. This seems applicable in my case, because I am now in the fifth decade 
of continuous writing on a single subject, the inside story of the Federal 
Reserve System. This book was from its inception commissioned and guided 
by Ezra Pound. Four of his proteges have previously been awarded the Nobel 
Prize for Literature, William Butler Yeats for his later poetry, James Joyce 
for "Ulysses", Ernest Hemingway for "The Sun Also Rises", and T.S. Elliot 
for "The Waste Land". Pound played a major role in the inspiration and in 
the editing of these works—which leads us to believe that this present work, 
also inspired by Pound, represents an ongoing literary tradition. 

Although this book in its inception was expected to be a tortuous work on 
economic and monetary techniques, it soon developed into a story of such 
universal and dramatic appeal that from the outset, Ezra Pound urged me to 
write it as a detective story, a genre which was invented by my fellow 
Virginian, Edgar Allan Poe. I believe that the continuous circulation of this 
book during the past forty years has not only exonerated Ezra Pound for his 
much condemned political and monetary statements, but also that it has 
been, and will continue to be, the ultimate weapon against the powerful 
conspirators who compelled him to serve thirteen and a half years without 
trial, as a political prisoner held in an insane asylum a la KGB. His earliest 
vindication came when the government agents who represented the 
conspirators refused to allow him to testify in his own defense; the second 
vindication came in 1958 when these same agents dropped all charges against 
him, and he walked out of St. Elizabeth's Hospital, a free man once more. His 
third and final vindication is this work, which documents every aspect of his 
exposure of the ruthless international financiers to whom Ezra Pound 
became but one more victim, doomed to serve years as the Man in the Iron 
Mask, because he had dared to alert his fellow-Americans to their furtive 
acts of treason against all people of the United States. 

In my lectures throughout this nation, and in my appearances on many radio 
and television programs, I have sounded the toxin that the Federal Reserve 
System is not Federal; it has no reserves; and it is not a system at all, but 
rather, a criminal syndicate. From November, 1910, when the conspirators 
met on Jekyll Island, Georgia, to the present time, the machinations of the 
Federal Reserve bankers have been shrouded in secrecy. Today, that secrecy 
has cost the American people a three trillion dollar debt, with annual interest 
payments to these bankers amounting to some three hundred billion dollars 
per year, sums which stagger the imagination, and which in themselves are 
ultimately unpayable. Officials of the Federal Reserve System routinely issue 



remonstrances to the public, much as the Hindu fakir pipes an insistent tune 
to the dazed cobra which sways its head before him, not to resolve the 
situation, but to prevent it from striking him. Such was the soothing letter 
written by Donald J. Winn, Assistant to the Board of Governors in response 
to an inquiry by a Congressman, the Honorable Norman D. Shumway, on 
March 10, 1983. Mr. Winn states that "The Federal Reserve System was 
established by an act of Congress in 1913 and is not a 'private corporation'." 
On the next page, Mr. Winn continues, "The stock of the Federal Reserve 
Banks is held entirely by commercial banks that are members of the Federal 
Reserve System. " He offers no explanation as to why the government has 
never owned a single share of stock in any Federal Reserve Bank, or why the 
Federal Reserve System is not a "private corporation" when all of its stock is 
owned by "private corporations". 

American history in the twentieth century has recorded the amazing 
achievements of the Federal Reserve bankers. First, the outbreak of World 
War I, which was made possible by the funds available from the new central 
bank of the United States. Second, the Agricultural Depression of 1920. 
Third, the Black Friday Crash on Wall Street of October, 1929 and the 
ensuing Great Depression. Fourth, World War II. Fifth, the conversion of the 
assets of the United States and its citizens from real property to paper assets 
from 1945 to the present, transforming a victorious America and foremost 
world power in 1945 to the world's largest debtor nation in 1990. Today, this 
nation lies in economic ruins, devastated and destitute, in much the same dire 
straits in which Germany and Japan found themselves in 1945. Will 
Americans act to rebuild our nation, as Germany and Japan have done when 
they faced the identical conditions which we now face—or will we continue to 
be enslaved by the Babylonian debt money system which was set up by the 
Federal Reserve Act in 1913 to complete our total destruction? This is the 
only question which we have to answer, and we do not have much time left to 
answer it. 

Because of the depth and the importance of the information which I had 
developed at the Library of Congress under the tutelage of Ezra Pound, this 
work became the happy hunting ground for many other would-be historians, 
who were unable to research this material for themselves. Over the past four 
decades, I have become accustomed to seeing this material appear in many 
other books, invariably attributed to other writers, with my name never 
mentioned. To add insult to injury, not only my material, but even my title 
has been appropriated, in a massive, if obtuse, work called " Secrets of the 
Temple—the Federal Reserve". This heavily advertised book received reviews 
ranging from incredulous to hilarious. Forbes Magazine advised its readers 
to read their review and save their money, pointing out that "a reader will 
discover no secrets" and that "This is one of those books whose fanfares far 
exceed their merit." This was not accidental, as this overblown whitewash of 
the Federal Reserve bankers was published by the most famous nonbook 
publisher in the world. 



After my initial shock at discovering that the most influential literary 
personality of the twentieth century, Ezra Pound, was imprisoned in "the 
Hellhole" in Washington, I immediately wrote for assistance to a Wall Street 
financier at whose estate I had frequently been a guest. I reminded him that 
as a patron of the arts, he could not afford to allow Pound to remain in such 
inhuman captivity. His reply shocked me even more. He wrote back that 
"your friend can well stay where he is." It was some years before I was able 
to understand that, for this investment banker and his colleagues, Ezra 
Pound would always be "the enemy". 

Eustace Mullins, Wyoming 1991 



Introduction 



Here are the simple facts of the great betrayal. Wilson and House knew that 
they were doing something momentous. One cannot fathom men's motives 
and this pair probably believed in what they were up to. What they did not 
believe in was representative government. They believed in government by 
an uncontrolled oligarchy whose acts would only become apparent after an 
interval so long that the electorate would be forever incapable of doing 
anything efficient to remedy depredations. 



Ezra Pound 

St. Elizabeth's Hospital 

Washington DC 1950 

(AUTHOR'S NOTE: Dr. Pound wrote this introduction for the earliest 
version of this book, published by Kasper and Horton, New York, 1952. 
Because he was being held as a political prisoner without trial by the Federal 
Government, he could not afford to allow his name to appear on the book 
because of additional reprisals against him. Neither could he allow the book 
to be dedicated to him, although he had commissioned its writing. The 
author is gratified to be able to remedy these necessary omissions, thirty- 
three years after the events.) 



JEFFERSON'S OPINION ON THE 
CONSTITUTIONALITY OF THE BANK 

February 15, 1791 

(The Writings of Thomas Jefferson, ed. by H. E. Bergh, Vol. Ill, p. 145 ff.) 

The bill for establishing a national bank, in 1791, undertakes, among other 

things,— 

1. To form the subscribers into a corporation. 

2. To enable them, in their corporate capacities, to receive grants of lands; 
and, so far, is against the laws of mortmain. 

3. To make alien subscribers capable of holding lands; and so far is against 
the laws of alienage. 

4. To transmit these lands, on the death of a proprietor, to a certain line of 
successors; and so far, changes the course of descents. 

5. To put the lands out of the reach of forfeiture, or escheat; and so far, is 
against the laws of forfeiture and escheat. 

6. To transmit personal chattels to successors, in a certain line; and so far, is 
against the laws of distribution. 

7. To give them the sole and exclusive right of banking, under the national 
authority; and, so far, is against the laws of monopoly. 

8. To communicate to them a power to make laws, paramount to the laws of 
the states; for so they must be construed, to protect the institution from the 
control of the state legislatures; and so probably they will be construed. 

I consider the foundation of the Constitution as laid on this ground—that all 
powers not delegated to the United States, by the Constitution, nor 
prohibited by it to the states, are reserved to the states, or to the people (12th 
amend.). To take a single step beyond the boundaries thus specially drawn 
around the powers of Congress, is to take possession of a boundless field of 
power, no longer susceptible of any definition. 

The incorporation of a bank, and the powers assumed by this bill, have not, 
in my opinion, been delegated to the United States by the Constitution. 



CHAPTER ONE 

Jekyll Island 

"The matter of a uniform discount rate was discussed and settled at Jekyll 

Island. "--Paul M. Warburgl 

On the night of November 22, 1910, a group of newspaper reporters stood 
disconsolately in the railway station at Hoboken, New Jersey. They had just 
watched a delegation of the nation's leading financiers leave the station on a 
secret mission. It would be years before they discovered what that mission 
was, and even then they would not understand that the history of the United 
States underwent a drastic change after that night in Hoboken. 

The delegation had left in a sealed railway car, with blinds drawn, for an 
undisclosed destination. They were led by Senator Nelson Aldrich, head of 
the National Monetary Commission. President Theodore Roosevelt had 
signed into law the bill creating the National Monetary Commission in 1908, 
after the tragic Panic of 1907 had resulted in a public outcry that the nation's 
monetary system be stabilized. Aldrich had led the members of the 
Commission on a two-year tour of Europe, spending some three hundred 
thousand dollars of public money. He had not yet made a report on the 
results of this trip, nor had he offered any plan for banking reform. 

Accompanying Senator Aldrich at the Hoboken station were his private 
secretary, Shelton; A. Piatt Andrew, Assistant Secretary of the Treasury, and 
Special Assistant of the National Monetary Commission; Frank Vanderlip, 
president of the National City Bank of New York, Henry P. Davison, senior 
partner of J.P. Morgan Company, and generally regarded as Morgan's 
personal emissary; and Charles D. Norton, president of the Morgan- 
dominated First National Bank of New York. Joining the group just before 
the train left the station were Benjamin Strong, also known as a lieutenant of 
J.P. Morgan; and Paul Warburg, a recent immigrant from Germany who 
had joined the banking house of Kuhn, Loeb 



1 Prof. Nathaniel Wright Stephenson, Paul Warburg's Memorandum, 
Nelson Aldrich A Leader in American Politics, Scribners, N.Y. 1930 



and Company, New York as a partner earning five hundred thousand dollars a year. 

Six years later, a financial writer named Bertie Charles Forbes (who later founded the 
Forbes Magazine; the present editor, Malcom Forbes, is his son), wrote: 

"Picture a party of the nation's greatest bankers stealing out of New York 
on a private railroad car under cover of darkness, stealthily hieing hundred 
of miles South, embarking on a mysterious launch, sneaking onto an island 
deserted by all but a few servants, living there a full week under such rigid 
secrecy that the names of not one of them was once mentioned lest the 
servants learn the identity and disclose to the world this strangest, most 
secret expedition in the history of American finance. I am not romancing; I 
am giving to the world, for the first time, the real story of how the famous 
Aldrich currency report, the foundation of our new currency system, was 
written .... The utmost secrecy was enjoined upon all. The public must not 
glean a hint of what was to be done. Senator Aldrich notified each one to go 
quietly into a private car of which therailroad had received orders to draw 
up on an unfrequented platform. Off the party set. New York's ubiquitous 
reporters had been foiled . . . Nelson (Aldrich) had confided to Henry, 
Frank, Paul and Piatt that he was to keep them locked up at Jekyll Island, 
out of the rest of the world, until they had evolved and compiled a scientific 
currency system for the United States, the real birth of the present Federal 
Reserve System, the plan done on Jekyll Island in the conference with Paul, 
Frank and Henry .... Warburg is the link that binds the Aldrich system 
and the present system together. He more than any one man has made the 
system possible as a working reality. "2 

The official biography of Senator Nelson Aldrich states: 

"In the autumn of 1910, six men went out to shoot ducks, Aldrich, his 
secretary Shelton, Andrews, Davison, Vanderlip and Warburg. Reporters 
were waiting at the Brunswick (Georgia) station. Mr. Davison went out and 
talked to them. The reporters dispersed and the secret of the strange 
journey was not divulged. Mr. Aldrich asked him how he had managed it 
and he did not volunteer the information. "3 

Davison had an excellent reputation as the person who could conciliate warring factions, a 
role he had performed for J.P. Morgan during the settling of the Money Panic of 1907. 
Another Morgan partner, T.W. Lamont, says: 

"Henry P. Davison served as arbitrator of the Jekyll Island expedition. "4 



2 "CURRENT OPINION", December, 1916, p. 382. 

3 Nathaniel Wright Stephenson, Nelson W. Aldrich, A Leader in American Politics, Scribners, N.Y. 
1930, Chap. XXIV "Jekyll Island" 

4 T.W. Lamont, Henry P. Davison, Harper, 1933 

2 



From these references, it is possible to piece together the story. Aldrich's 
private car, which had left Hoboken station with its shades drawn, had taken 
the financiers to Jekyll Island, Georgia. Some years earlier, a very exclusive 
group of millionaires, led by J.P. Morgan, had purchased the island as a 
winter retreat. They called themselves the Jekyll Island Hunt Club, and, at 
first, the island was used only for hunting expeditions, until the millionaires 
realized that its pleasant climate offered a warm retreat from the rigors of 
winters in New York, and began to build splendid mansions, which they 
called "cottages", for their families' winter vacations. The club building 
itself, being quite isolated, was sometimes in demand for stag parties and 
other pursuits unrelated to hunting. On such occasions, the club members 
who were not invited to these specific outings were asked not to appear there 
for a certain number of days. Before Nelson Aldrich's party had left New 
York, the club's members had been notified that the club would be occupied 
for the next two weeks. 

The Jekyll Island Club was chosen as the place to draft the plan for control 
of the money and credit of the people of the United States, not only because 
of its isolation, but also because it was the private preserve of the people who 
were drafting the plan. The New York Times later noted, on May 3, 1931, in 
commenting on the death of George F. Baker, one of J.P. Morgan's closest 
associates, that "Jekyll Island Club has lost one of its most distinguished 
members. One-sixth of the total wealth of the world was represented by the 
members of the Jekyll Island Club." Membership was by inheritance only. 

The Aldrich group had no interest in hunting. Jekyll Island was chosen for 
the site of the preparation of the central bank because it offered complete 
privacy, and because there was not a journalist within fifty miles. Such was 
the need for secrecy that the members of the party agreed, before arriving at 
Jekyll Island, that no last names would be used at any time during their two 
week stay. The group later referred to themselves as the First Name Club, as 
the last names of Warburg, Strong, Vanderlip and the others were 
prohibited during their stay. The customary attendants had been given two 
week vacations from the club, and new servants brought in from the 
mainland for this occasion who did not know the names of any of those 
present. Even if they had been interrogated after the Aldrich party went 
back to New York, they could not have given the names. This arrangement 
proved to be so satisfactory that the members, limited to those who had 
actually been present at Jekyll Island, later had a number of informal get- 
togethers in New York. 

Why all this secrecy? Why this thousand mile trip in a closed railway car to a 
remote hunting club? Ostensibly, it was to carry out a program of public 
service, to prepare banking reform which would be a boon to the people of 
the United States, which had been ordered by the National 



Monetary Commission. The participants were no strangers to public 
benefactions. Usually, their names were inscribed on brass plaques, or on the 
exteriors of buildings which they had donated. This was not the procedure 
which they followed at Jekyll Island. No brass plaque was ever erected to 
mark the selfless actions of those who met at their private hunt club in 1910 
to improve the lot of every citizen of the United States. 

In fact, no benefaction took place at Jekyll Island. The Aldrich group 
journeyed there in private to write the banking and currency legislation 
which the National Monetary Commission had been ordered to prepare in 
public. At stake was the future control of the money and credit of the United 
States. If any genuine monetary reform had been prepared and presented to 
Congress, it would have ended the power of the elitist one world money 
creators. Jekyll Island ensured that a central bank would be established in 
the United States which would give these bankers everything they had always 
wanted. 

As the most technically proficient of those present, Paul Warburg was 
charged with doing most of the drafting of the plan. His work would then be 
discussed and gone over by the rest of the group. Senator Nelson Aldrich was 
there to see that the completed plan would come out in a form which he could 
get passed by Congress, and the other bankers were there to include 
whatever details would be needed to be certain that they got everything they 
wanted, in a finished draft composed during a onetime stay. After they 
returned to New York, there could be no second get together to rework their 
plan. They could not hope to obtain such secrecy for their work on a second 
journey. 

The Jekyll Island group remained at the club for nine days, working 
furiously to complete their task. Despite the common interests of those 
present, the work did not proceed without friction. Senator Aldrich, always a 
domineering person, considered himself the chosen leader of the group, and 
could not help ordering everyone else about. Aldrich also felt somewhat out 
of place as the only member who was not a professional banker. He had had 
substantial banking interests throughout his career, but only as a person who 
profited from his ownership of bank stock. He knew little about the technical 
aspects of financial operations. His opposite number, Paul Warburg, believed 
that every question raised by the group demanded, not merely an answer, 
but a lecture. He rarely lost an opportunity to give the members a long 
discourse designed to impress them with the extent of his knowledge of 
banking. This was resented by the others, and often drew barbed remarks 
from Aldrich. The natural diplomacy of Henry P. Davison proved to be the 
catalyst which kept them at their work. Warburg's thick alien accent grated 
on them, and constantly reminded them that they had to accept his presence 
if a central bank plan was to be devised which would guarantee them their 
future pro- 



fits. Warburg made little effort to smooth over their prejudices, and 
contested them on every possible occasion on technical banking questions, 
which he considered his private preserve. "In all conspiracies there must be 
great secrecy. "5 

The "monetary reform" plan prepared at Jekyll Island was to be presented 
to Congress as the completed work of the National Monetary Commission. It 
was imperative that the real authors of the bill remain hidden. So great was 
popular resentment against bankers since the Panic of 1907 that no 
Congressman would dare to vote for a bill bearing the Wall Street taint, no 
matter who had contributed to his campaign expenses. The Jekyll Island 
plan was a central bank plan, and in this country there was a long tradition 
of struggle against inflicting a central bank on the American people. It had 
begun with Thomas Jefferson's fight against Alexander Hamilton's scheme 
for the First Bank of the United States, backed by James Rothschild. It had 
continued with President Andrew Jackson's successful war against 
Alexander Hamilton's scheme for the Second Bank of the United States, in 
which Nicholas Biddle was acting as the agent for James Rothschild of Paris. 
The result of that struggle was the creation of the Independent Sub-Treasury 
System, which supposedly had served to keep the funds of the United States 
out of the hands of the financiers. A study of the panics of 1873, 1893, and 
1907 indicates that these panics were the result of the international bankers' 
operations in London. The public was demanding in 1908 that Congress 
enact legislation to prevent the recurrence of artificially induced money 
panics. Such monetary reform now seemed inevitable. It was to head off and 
control such reform that the National Monetary Commission had been set up 
with Nelson Aldrich at its head, since he was majority leader of the Senate. 

The main problem, as Paul Warburg informed his colleagues, was to avoid 
the name "Central Bank". For that reason, he had decided upon the 
designation of "Federal Reserve System". This would deceive the people into 
thinking it was not a central bank. However, the Jekyll Island plan would be 
a central bank plan, fulfilling the main functions of a central bank; it would 
be owned by private individuals who would profit from ownership of shares. 
As a bank of issue, it would control the nation's money and credit. 

In the chapter on Jekyll Island in his biography of Aldrich, Stephenson 
writes of the conference: 

"How was the Reserve Bank to be controlled? It must be controlled by 
Congress. The government was to be represented in the board of directors, it 
was to have full knowledge of all the Bank's, affairs, but a majority 



5 Clarendon, Hist. Reb. 1647 



of the directors were to be chosen, directly or indirectly, by the banks of the 
association." 6 

Thus the proposed Federal Reserve Bank was to be "controlled by Congress" and 
answerable to the government, but the majority of the directors were to be chosen, 
"directly or indirectly" by the banks of the association. In the final refinement of 
Warburg's plan, the Federal Reserve Board of Governors would be appointed by 
the President of the United States, but the real work of the Board would be 
controlled by a Federal Advisory Council, meeting with the Governors. The Council 
would be chosen by the directors of the twelve Federal Reserve Banks, and would 
remain unknown to the public. 

The next consideration was to conceal the fact that the proposed "Federal Reserve 
System" would be dominated by the masters of the New York money market. The 
Congressmen from the South and the West could not survive if they voted for a 
Wall Street plan. Farmers and small businessmen in those areas had suffered most 
from the money panics. There had been great popular resentment against the 
Eastern bankers, which during the nineteenth century became a political movement 
known as "populism". The private papers of Nicholas Biddle, not released until 
more than a century after his death, show that quite early on the Eastern bankers 
were fully aware of the widespread public opposition to them. 

Paul Warburg advanced at Jekyll Island the primary deception which would 
prevent the citizens from recognizing that his plan set up a central bank. This was 
the regional reserve system. He proposed a system of four (later twelve) branch 
reserve banks located in different sections of the country. Few people outside the 
banking world would realize that the existing concentration of the nation's money 
and credit structure in New York made the proposal of a regional reserve system a 
delusion. 

Another proposal advanced by Paul Warburg at Jekyll Island was the manner of 
selection of administrators for the proposed regional reserve system. Senator Nelson 
Aldrich had insisted that the officials should be appointive, not elected, and that 
Congress should have no role in their selection. His Capitol Hill experience had 
taught him that congressional opinion would often be inimical to the Wall Street 
interests, as Congressmen from the West and South might wish to demonstrate to 
their constituents that they were protecting them against the Eastern bankers. 

Warburg responded that the administrators of the proposed central banks should 
be subject to executive approval by the President. This patent removal of the system 
from Congressional control meant that the 



6 Nathaniel Wright Stephenson, Nelson W. Aldrich, A Leader in American Politics, 
Scribners, N.Y. 1930, Chap. XXIV "Jekyll Island" p. 379 



Federal Reserve proposal was unconstitutional from its inception, because 
the Federal Reserve System was to be a bank of issue. Article 1, Sec. 8, Par. 5 
of the Constitution expressly charges Congress with "the power to coin 
money and regulate the value thereof.". Warburg's plan would deprive 
Congress of its sovereignty, and the systems of checks and balances of power 
set up by Thomas Jefferson in the Constitution would now be destroyed. 
Administrators of the proposed system would control the nation's money and 
credit, and would themselves be approved by the executive department of the 
government. The judicial department (the Supreme Court, etc.) was already 
virtually controlled by the executive department through presidential 
appointment to the bench. 

Paul Warburg later wrote a massive exposition of his plan, The Federal 
Reserve System, Its Origin and Growth7 of some 1750 pages, but the name 
" Jekyll Island" appears nowhere in this text. He does state (Vol. 1, p. 58): 

"But then the conference closed, after a week of earnest deliberation, the 
rough draft of what later became the Aldrich Bill had been agreed upon, and 
a plan had been outlined which provided for a 'National Reserve 
Association,' meaning a central reserve organization with an elastic note 
issue based on gold and commercial paper. " 

On page 60, Warburg writes, "The results of the conference were entirely 
confidential. Even the fact there had been a meeting was not permitted to 
become public." He adds in a footnote, "Though eighteen [sic] years have 
since gone by, I do not feel free to give a description of this most interesting 
conference concerning which Senator Aldrich pledged all participants to 
secrecy. " 

B.C. Forbes' revelation8 of the secret expedition to Jekyll Island, had had 
surprisingly little impact. It did not appear in print until two years after the 
Federal Reserve Act had been passed by Congress, hence it was never read 
during the period when it could have had an effect, that is, during the period 
when it could have had an effect, that 



7 Paul Warburg, The Federal Reserve System, Its Origin and Growth, 
Volume I, p. 58, Macmillan, New York, 1930 

8 CURRENT OPINION, December, 1916, p. 382 

7 



is, during the Congressional debate on the bill. Forbes' story was also dismissed, by those "in 
the know," as preposterous, and a mere invention. Stephenson mentions this on page 484 of 
his book about Aldrich.9 

"This curious episode of Jekyll Island has been generally regarded as a myth. B.C. Forbes 
got some information from one of the reporters. It told in vague outline the Jekyll Island 
story, but made no impression and was generally regarded as a mere yarn." 

The coverup of the Jekyll Island conference proceeded along two lines, both of which were 
successful. The first, as Stephenson mentions, was to dismiss the entire story as a romantic 
concoction which never actually took place. Although there were brief references to Jekyll 
Island in later books concerning the Federal Reserve System, these also attracted little 
public attention. As we have noted, Warburg's massive and supposedly definite work on the 
Federal Reserve System does not mention Jekyll Island at all, although he does admit that a 
conference took place. In none of his voluminous speeches or writings do the words " Jekyll 
Island" appear, with a single notable exception. He agreed to Professor Stephenson's request 
that he prepare a brief statement for the Aldrich biography. This appears on page 485 as 
part of "The Warburg Memorandum". In this excerpt, Warburg writes, "The matter of a 
uniform discount rate was discussed and settled at Jekyll Island. " 

Another member of the "First Name Club" was less reticent. Frank Vanderlip later 
published a few brief references to the conference. In the Saturday Evening Post, February 
9, 1935, p. 25, Vanderlip wrote: 

"Despite my views about the value to society of greater publicity for the affairs of 
corporations, there was an occasion near the close of 1910, when I was as secretive, indeed, 
as furtive, as any conspirator. . . . Since it would have been fatal to Senator Aldrich's plan to 
have it known that he was calling on anybody from Wall Street to help him in preparing his 
bill, precautions were taken that would have delighted the heart of James Stillman (a 
colorful and secretive banker who was President of the National City Bank during the 
Spanish-American War, and who was thought to have been involved in getting us into that 
war) ... I do not feel it is any exaggeration to speak of our secret expedition to Jekyll Island 
as the occasion of the actual conception of what eventually became the Federal Reserve 
System." 

In a Travel feature in The Washington Post, March 27, 1983, "Follow The Rich to Jekyll 
Island", Roy Hoopes writes: 

"In 1910, when Aldrich and four financial experts wanted a place to meet in secret to reform 
the country's banking system, they faked a hunting trip to Jekyll country's banking system, 
they faked a hunting trip to Jekyll and for 10 days holed up in the Clubhouse, where they 
made plans for what eventually would become the Federal Reserve Bank. " 



9 Nathaniel Wright Stephenson, Nelson W. Aldrich, A Leader in American Politics, 
Scribners, N.Y. 1930, Chap. XXIV "Jekyll Island" p. 379 

8 



Vanderlip later wrote in his autobiography, From Farmboy to Financier: 10 

"Our secret expedition to Jekyll Island was the occasion of the actual 
conception of what eventually became the Federal Reserve System. The 
essential points of the Aldrich Plan were all contained in the Federal Reserve 
Act as it was passed." 

Professor E.R.A. Seligman, a member of the international banking family of 
J. & W. Seligman, and head of the Department of Economics at Columbia 
University, wrote in an essay published by the Academy of Political Science, 
Proceedings, v. 4, No. 4, p. 387-90: 

"It is known to a very few how great is the indebtedness of the United States 
to Mr. Warburg. For it may be said without fear of contradiction that in its 
fundamental features the Federal Reserve Act is the work of Mr. Warburg 
more than any other man in the country. The existence of a Federal Reserve 
Board creates, in everything but in name, a real central bank. In the two 
fundamentals of command of reserves and of a discount policy, the Federal 
Reserve Act has frankly accepted the principle of the Aldrich Bill, and these 
principles, as has been stated, were the creation of Mr. Warburg and Mr. 
Warburg alone. It must not be forgotten that Mr. Warburg had a practical 
object in view. In formulating his plans and in advancing in them slightly 
varying suggestions from time to time, it was incumbent on him to remember 
that the education of the country must be gradual and that a large part of the 
task was to break down prejudices and remove suspicion. His plans therefore 
contained all sorts of elaborate suggestions designed to guard the public 
against fancied dangers and to persuade the country that the general scheme 
was at all practicable. It was the hope of Mr. Warburg that with the lapse of 
time it might be possible to eliminate from the law a few clauses which were 
inserted largely at his suggestion for educational purposes. " 

Now that the public debt of the United States has passed a trillion dollars, we 
may indeed admit "how great is the indebtedness of the United States to Mr. 
Warburg." At the time he wrote the Federal Reserve Act, the public debt 
was almost nonexistent. 

Professor Seligman points out Warburg's remarkable prescience that the 
real task of the members of the Jekyll Island conference was to prepare a 
banking plan which would gradually "educate the country" and "break 
down prejudices and remove suspicion". The campaign to enact the plan into 
law succeeded in doing just that. 



10 Frank Vanderlip, From Farmboy to Financier 

9 



CHAPTER TWO 

The Aldrich Plan 

"Finance and the tariff are reserved by Nelson Aldrich as falling within his 
sole purview and jurisdiction. Mr. Aldrich is endeavoring to devise, through 
the National Monetary Commission, a banking and currency law. A great 
many hundred thousand persons are firmly of the opinion that Mr. Aldrich 
sums up in his personality the greatest and most sinister menace to the 
popular welfare of the United States. Ernest Newman recently said, 'What 
the South visits on the Negro in a political way, Aldrich would mete out to the 
mudsills of the North, if he could devise a safe and practical way to 
accomplish it." -Harper's Weekly, May 7, 1910." 

The participants in the Jekyll Island conference returned to New York to 
direct a nationwide propaganda campaign in favor of the "Aldrich Plan". 
Three of the leading universities, Princeton, Harvard, and the University of 
Chicago, were used as the rallying points for this propaganda, and national 
banks had to contribute to a fund of five million dollars to persuade the 
American public that this central bank plan should be enacted into law by 
Congress. 

Woodrow Wilson, governor of New Jersey and former president of Princeton 
University, was enlisted as a spokesman for the Aldrich Plan. During the 
Panic of 1907, Wilson had declared, "All this trouble could be averted if we 
appointed a committee of six or seven public-spirited men like J.P. Morgan 
to handle the affairs of our country." 

In his biography of Nelson Aldrich in 1930, Stephenson says: 

"A pamphlet was issued January 16, 1911, 'Suggested Plan for Monetary 
Legislation', by Hon. Nelson Aldrich, based on Jekyll Island conclusions." 
Stephenson says on page 388, "An organization for financial progress has 
been formed. Mr. Warburg introduced a resolution authorizing the 
establishment of the Citizens' League, later the National Citizens League . . . 
Professor Laughlin of the University of Chicago was given charge of the 
League's propaganda. "11 

It is notable that Stephenson characterizes the work of the National Citizens 
League as "propaganda", in line with Seligman's exposition of 



11 Nathaniel Wright Stephenson, Nelson W. Aldrich, A Leader in American 
Politics, Scribners, N.Y. 1930 

10 



Warburg's work as "the education of the country" and "to break down 
prejudices". 

Much of the five million dollars of the bankers slush fund was spent under the 
auspices of the National Citizens' League, which was made up of college professors. 
The two most tireless propagandists for the Aldrich Plan were Professor O.M. 
Sprague of Harvard, and J. Laurence Laughlin of the University of Chicago. 

Congressman Charles A. Lindbergh, Sr., notes: 

"J. Laurence Laughlin, Chairman of the Executive Committee of the National 
Citizens' League since its organization, has returned to his position as professor of 
political economics in the University of Chicago. In June, 1911, Professor Laughlin 
was given a year's leave from the university, that he might give all of his time to the 
campaign of education undertaken by the League . . . He has worked indefatigably, 
and it is largely due to his efforts and his persistence that the campaign enters the 
final stage with flattering prospects of a successful outcome . . . The reader knows 
that the University of Chicago is an institution endowed by John D. Rockefeller, 
with nearly fifty million dollars." 12 

In his biography of Nelson Aldrich, Stephenson reveals that the Citizens' League 
was also a Jekyll Island product. In chapter 24 we find that: The Aldrich Plan was 
represented to Congress as the result of three years of work, study and travel by 
members of the National Monetary Commission, with expenditures of more than 
three hundred thousand dollars.* 

Testifying before the Committee on Rules, December 15, 1911, after the Aldrich 
plan had been introduced in Congress, Congressman Lindbergh stated, 

" Our financial system is a false one and a huge burden on the people ... I have 
alleged that there is a Money Trust. The Aldrich plan is a scheme plainly in the 
interest of the Trust . . . Why does the Money Trust press so hard for the Aldrich 
Plan now, before the people know what the money trust has been doing?" 

Lindbergh continued his speech, "The Aldrich Plan is the Wall Street Plan. It is a 
broad challenge to the Government by the champion of the Money Trust. It means 
another panic, if necessary, to intimidate the people. Aldrich, paid by the 
Government to represent the people, proposes a plan for the trusts instead. It was 
by a very clever move that the National Monetary Commission was created. In 1907 
nature responded most beautifully and gave this country the most bountiful crop it 
had ever had. Other industries were busy too, and from a natural standpoint all the 
conditions were right for a most 



12 Charles A. Lindbergh, Sr., Banking, Currency and the Money Trust, 1913, p. 131 
* In 1911, the Aldrich Plan became part of the official platform of the Republican Party. 

11 



prosperous year. Instead, a panic entailed enormous losses upon us. Wall Street 
knew the American people were demanding a remedy against the recurrence of such 
a ridiculously unnatural condition. Most Senators and Representatives fell into the 
Wall Street trap and passed the Aldrich Vreeland Emergency Currency Bill. But 
the real purpose was to get a monetary commission which would frame a 
proposition for amendments to our currency and banking laws which would suit the 
Money Trust. The interests are now busy everywhere educating the people in favor 
of the Aldrich Plan. It is reported that a large sum of money has been raised for this 
purpose. Wall Street speculation brought on the Panic of 1907. The depositors' 
funds were loaned to gamblers and anybody the Money Trust wanted to favour. 
Then when the depositors wanted their money, the banks did not have it. That made 
the panic." 

Edward Vreeland, co-author of the bill, wrote in the August 25, 1910 Independent 
(which was owned by Aldrich), "Under the proposed monetary plan of Senator 
Aldrich, monopolies will disappear, because they will not be able to make more than 
four percent interest and monopolies cannot continue at such a low rate. Also, this 
will mark the disappearance of the Government from the banking business. " 

Vreeland's fantastic claims were typical of the propaganda flood unleashed to pass 
the Aldrich Plan. Monopolies would disappear, the Government would disappear 
from the banking business. Pie in the sky. 

Nation Magazine, January 19, 1911, noted, "The name of Central Bank is carefully 
avoided, but the 'Federal Reserve Association', the name given to the proposed 
central organization, is endowed with the usual powers and responsibilities of a 
European Central Bank." 

After the National Monetary Commission had returned from Europe, it held no 
official meetings for nearly two years. No records or minutes were ever presented 
showing who had authored the Aldrich Plan. Since they held no official meetings, 
the members of the commission could hardly claim the Plan as their own. The sole 
tangible result of the Commission's three hundred thousand dollar expenditure was 
a library of thirty massive volumes on European banking. Typical of these works is 
a thousand page history of the Reichsbank, the central bank which controlled 
money and credit in Germany, and whose principal stockholders, were the 
Rothschilds and Paul Warburg's family banking house of M.M. Warburg 
Company. The Commission's records show that it never functioned as a deliberative 
body. Indeed, its only "meeting" was the secret conference held at Jekyll Island, and 
this conference is not mentioned in any publication of the Commission. Senator 
Cummins passed a resolution in Congress ordering the Commission to report on 
January 8, 1912, and show some constructive results of its three years' work. In the 
face of this challenge, the National Monetary Commission ceased to exist. 



12 



With their five million dollars as a war chest, the Aldrich Plan propagandists waged 
a no-holds barred war against their opposition. Andrew Frame testified before the 
House Banking and Currency Committee of the American Bankers Association. He 
represented a group of Western bankers who opposed the Aldrich Plan: 

CHAIRMAN CARTER GLASS: "Why didn't the Western bankers make 
themselves heard when the American Bankers Association gave its unqualified and, 
we are assured, unanimous approval of the scheme proposed by the National 
Monetary Commission?" 

ANDREW FRAME: "I'm glad you called my attention to that. When that monetary 
bill was given to the country, it was but a few days previous to the meeting of the 
American Bankers Association in New Orleans in 1911. There was not one banker 
in a hundred who had read that bill. We had twelve addresses in favor of it. General 
Hamby of Austin, Texas, wrote a letter to President Watts asking for a hearing 
against the bill. He did not get a very courteous answer. I refused to vote on it, and a 
great many other bankers did likewise." 

MR. BULKLEY: "Do you mean that no member of the Association could be heard 
in opposition to the bill?" 

ANDREW FRAME: "They throttled all argument." 

MR. KINDRED: "But the report was given out that it was practically unanimous." 

ANDREW FRAME: "The bill had already been prepared by Senator Aldrich and 
presented to the executive council of the American Bankers Association in May, 
1911. As a member of that council, I received a copy the day before they acted upon 
it. When the bill came in at New Orleans, the bankers of the United States had not 
read it. " 

MR. KINDRED: "Did the presiding officer simply rule out those who wanted to 
discuss it negatively? " 

ANDREW FRAME: "They would not allow anyone on the program who was not in 
favor of the bill." 

CHAIRMAN GLASS: "What significance has the fact that at the next annual 
meeting of the American Bankers Association held at Detroit in 1912, the 
Association did not reiterate its endorsement of the plan of the National Monetary 
Commission, known as the Aldrich scheme?" 

ANDREW FRAME: "It did not reiterate the endorsement for the simple fact that 
the backers of the Aldrich Plan knew that the Association would not endorse it. We 
were ready for them, but they did not bring it up." 



13 

Andrew Frame exposed the collusion which in 1911 procured an endorsement of the 
Aldrich Plan from the American Bankers Association but which in 1912 did not 



even dare to repeat its endorsement, for fear of an honest and open discussion of the 
merits of the plan. 

Chairman Glass then called as witness one of the ten most powerful bankers in the 
United States, George Blumenthal, partner of the international banking house of 
Lazard Freres and brother-in-law of Eugene Meyer, Jr. Carter Glass effusively 
welcomed Blumenthal, stating that "Senator O'Gorman of New York was kind 
enough to suggest your name to us." A year later, O'Gorman prevented a Senate 
Committee from asking his master, Paul Warburg, any embarrassing questions 
before approving his nomination as the first Governor of the Federal Reserve 
Board. 

George Blumenthal stated, "Since 1893 my firm of Lazard Freres has been foremost 
in importations and exportations of gold and has thereby come into contact with 
everybody who had anything to do with it." 

Congressman Taylor asked, "Have you a statement there as to the part you have 
had in the importation of gold into the United States?" Taylor asked this because 
the Panic of 1893 is known to economists as a classic example of a money panic 
caused by gold movements. 

"No," replied George Blumenthal, "I have nothing at all on that, because it is not 
bearing on the question." 

A banker from Philadelphia, Leslie Shaw, dissented with other witnesses at these 
hearings, criticizing the much vaunted "decentralization" of the System. He said, 
"Under the Aldrich Plan the bankers are to have local associations and district 
associations, and when you have a local organization, the centered control is 
assured. Suppose we have a local association in Indianapolis; can you not name the 
three men who will dominate that association? And then can you not name the one 
man everywhere else. When you have hooked the banks together, they can have the 
biggest influence of anything in this country, with the exception of the newspapers." 

To promote the Democratic currency bill, Carter Glass made public the sorry 
record of the Republican efforts of Senator Aldrich's National Monetary 
Commission. His House Report in 1913 said, "Senator MacVeagh fixes the cost of 
the National Monetary Commission to May 12, 1911 at $207,130. They have since 
spent another hundred thousand dollars of the taxpayer's money. The work done at 
such cost cannot be ignored, but, having examined the extensive literature published 
by the Commission, the Banking and Currency Committee finds little that bears 
upon the present state of the credit market of the United States. We object to the 
Aldrich Bill on the following points: 



14 



Its entire lack of adequate government or public control of the banking 
mechanism it sets up. 

Its tendency to throw voting control into the hands of the large banks of the 
system. 

The extreme danger of inflation of currency inherent in the system. 

The insincerity of the bond-funding plan provided for by the measure, there 
being a barefaced pretense that this system was to cost the government 
nothing. 

The dangerous monopolistic aspects of the bill. 

Our Committee at the outset of its work was met by a well-defined sentiment 
in favor of a central bank which was the manifest outgrowth of the work that 
had been done by the National Monetary Commission." 

Glass's denunciation of the Aldrich Bill as a central bank plan ignored the 
fact that his own Federal Reserve Act would fulfill all the functions of a 
central bank. Its stock would be owned by private stockholders who could 
use the credit of the Government for their own profit; it would have control 
of the nation's money and credit resources; and it would be a bank of issue 
which would finance the government by "mobilizing" credit in time of war. 
In "The Rationale of Central Banking," Vera C. Smith (Committee for 
Monetary Research and Education, June, 1981) writes, "The primary 
definition of a central bank is a banking system in which a single bank has 
either a complete or residuary monopoly in the note issue. A central bank is 
not a natural product of banking development. It is imposed from outside or 
comes into being as the result of Government favors. " 

Thus a central bank attains its commanding position from its government 
granted monopoly of the note issue. This is the key to its power. Also, the act 
of establishing a central bank has a direct inflationary impact because of the 
fractional reserve system, which allows the creation of book-entry loans and 
thereby, money, a number of times the actual "money" which the bank has 
in its deposits or reserves. 

The Aldrich Plan never came to a vote in Congress, because the Republicans 
lost control of the House in 1910, and subsequently lost the Senate and the 
Presidency in 1912. 



15 



CHAPTER THREE 

The Federal Reserve Act 

"Our financial system is a false one and a huge burden on the people . . . This 
Act establishes the most gigantic trust on earth. "--Congressman Charles 
Augustus Lindbergh, Sr. 

The speeches of Senator LaFollette and Congressman Lindbergh became 
rallying points of opposition to the Aldrich Plan in 1912. They also aroused 
popular feeling against the Money Trust. Congressman Lindbergh said, on 
December 15, 1911, "The government prosecutes other trusts, but supports 
the money trust. I have been waiting patiently for several years for an 
opportunity to expose the false money standard, and to show that the 
greatest of all favoritism is that extended by the government to the money 
trust." 

Senator LaFollette publicly charged that a money trust of fifty men 
controlled the United States. George F. Baker, partner of J.P. Morgan, on 
being queried by reporters as to the truth of the charge, replied that it was 
absolutely in error. He said that he knew from personal knowledge that not 
more than eight men ran this country. 

The Nation Magazine replied editorially to Senator LaFollette that "If there 
is a Money Trust, it will not be practical to establish that it exercises its 
influence either for good or for bad. " 

Senator LaFollette remarks in his memoirs that his speech against the Money 
Trust later cost him the Presidency of the United States, just as Woodrow 
Wilson's early support of the Aldrich Plan had brought him into 
consideration for that office. 

Congress finally made a gesture to appease popular feeling by appointing a 
committee to investigate the control of money and credit in the United States. 
This was the Pujo Committee , a subcommittee of the House Banking and 
Currency Committee, which conducted the famous "Money Trust" hearings 
in 1912, under the leadership of Congressman Arsene Pujo of Louisiana, who 
was regarded as a spokesman for the oil interests. These hearings were 
deliberately dragged on for five months, and resulted in six-thousand pages 
of printed testimony in four volumes. Month after month, the bankers made 
the train trip from New York to Washington, testified before the Committee 
and returned to New York. The hearings were extremely dull, and no 
startling information turned up at these sessions. The bankers solemnly 
admitted that they 

16 



were indeed bankers, insisted that they always operated in the public 
interest, and claimed that they were animated only by the highest ideals of 
public service, like the Congressmen before whom they were testifying. 

The paradoxical nature of the Pujo Money Trust Hearings may better be 
understood if we examine the man who single-handedly carried on these 
hearings, Samuel Untermyer. He was one of the principal contributors to 
Woodrow Wilson's Presidential campaign fund, and was one of the 
wealthiest corporation lawyers in New York. He states in his autobiography 
in "Who's Who" of 1926 that he once received a $775,000 fee for a single 
legal transaction, the successful merger of the Utah Copper Company and 
the Boston Consolidated and Nevada Company, a firm with a market value 
of one hundred million dollars. He refused to ask either Senator LaFollette 
or Congressman Lindbergh to testify in the investigation which they alone 
had forced Congress to hold. As Special Counsel for the Pujo Committee, 
Untermyer ran the hearings as a one-man operation. The Congressional 
members, including its chairman, Congressman Arsene Pujo, seemed to have 
been struck dumb from the commencement of the hearings to their 
conclusion. One of these silent servants of the public was Congressman 
James Byrnes, of South Carolina, representing Bernard Baruch's home 
district, who later achieved fame as "Baruch's man", and was placed by 
Baruch in charge of the Office of War Mobilization during the Second World 
War. 

Although he was a specialist in such matters, Untermyer did not ask any of 
the bankers about the system of interlocking directorates through which they 
controlled industry. He did not go into international gold movements, which 
were known as a factor in money panics, or the international relationships 
between American bankers and European bankers. The international 
banking houses of Eugene Meyer, Lazard Freres, J. & W. Seligman, 
Ladenburg Thalmann, Speyer Brothers, M. M. Warburg, and the Rothschild 
Brothers did not arouse Samuel Untermyer' s curiosity, although it was well 
known in the New York financial world that all of these family banking 
houses either had branches or controlled subsidiary houses in Wall Street. 
When Jacob Schiff appeared before the Pujo Committee, Mr. Untermyer's 
adroit questioning allowed Mr. Schiff to talk for many minutes without 
revealing any information about the operations of the banking house of 
Kuhn Loeb Company, of which he was senior partner, and which Senator 
Robert L. Owen had identified as the representative of the European 
Rothschilds in the United States. 

The aging J.P. Morgan, who had only a few more months to live, appeared 
before the Committee to justify his decades of international financial deals. 
He stated for Mr. Untermyer's edification that "Money is a commodity." 
This was a favorite ploy of the money creators, as they wished to make the 
public believe that the creation of money was a natural occur- 

17 



rence akin to the growing of a field of corn, although it was actually a bounty 
conferred upon the bankers by governments over which they had gained 
control. 

J.P. Morgan also told the Pujo Committee that, in making a loan, he 
seriously considered only one factor, a man's character; even the man's 
ability to repay the loan, or his collateral, were of little importance. This 
astonishing observation startled even the blase members of the Committee. 

The farce of the Pujo Committee ended without a single well-known 
opponent of the money creators being allowed to appear or testify. As far as 
Samuel Untermyer was concerned, Senator LaFollette and Congressman 
Charles Augustus Lindbergh had never existed. Nevertheless, these 
Congressmen had managed to convince the people of the United States that 
the New York bankers did have a monopoly on the nation's money and 
credit. At the close of the hearings, the bankers and their subsidized 
newspapers claimed that the only way to break this monopoly was to enact 
the banking and currency legislation now being proposed to Congress, a bill 
which would be passed a year later as the Federal Reserve Act. The press 
seriously demanded that the New York banking monopoly be broken by 
turning over the administration of the new banking system to the most 
knowledgeable banker of them all, Paul Warburg. 

The Presidential campaign of 1912 records one of the more interesting 
political upsets in American history. The incumbent, William Howard Taft, 
was a popular president, and the Republicans, in a period of general 
prosperity, were firmly in control of the government through a Republican 
majority in both houses. The Democratic challenger, Woodrow Wilson, 
Governor of New Jersey, had no national recognition, and was a stiff, austere 
man who excited little public support. Both parties included a monetary 
reform bill in their platforms: The Republicans were committed to the 
Aldrich Plan, which had been denounced as a Wall Street plan, and the 
Democrats had the Federal Reserve Act. Neither party bothered to inform 
the public that the bills were almost identical except for the names. In 
retrospect, it seems obvious that the money creators decided to dump Taft 
and go with Wilson. How do we know this? Taft seemed certain of reelection, 
and Wilson would return to obscurity. Suddenly, Theodore Roosevelt "threw 
his hat into the ring." He announced that he was running as a third party 
candidate, the "Bull Moose". His candidacy would have been ludicrous had 
it not been for the fact that he was exceptionally well-financed. Moreover, he 
was given unlimited press coverage, more than Taft and Wilson combined. 
As a Republican ex-president, it was obvious that Roosevelt would cut deeply 
into Taft's vote. This proved the case, and Wilson won the election. To this 
day, no one can say what Theodore Roosevelt's program was, or why he 
would sabotage his own party. Since the bankers were financing all three 
candi- 

18 



dates, they would win regardless of the outcome. Later Congressional 
testimony showed that in the firm of Kuhn Loeb Company, Felix Warburg 
was supporting Taft, Paul Warburg and Jacob Schiff were supporting 
Wilson, and Otto Kahn was supporting Roosevelt. The result was that a 
Democratic Congress and a Democratic President were elected in 1912 to get 
the central bank legislation passed. It seems probable that the identification 
of the Aldrich Plan as a Wall Street operation predicted that it would have a 
difficult passage through Congress, as the Democrats would solidly oppose it, 
whereas a successful Democratic candidate, supported by a Democratic 
Congress, would be able to pass the central bank plan. Taft was thrown 
overboard because the bankers doubted he could deliver on the Aldrich Plan, 
and Roosevelt was the instrument of his demise. *The final electoral vote in 1912 

was Wilson - 409; Roosevelt - 167; and Taft - 15. 

To further confuse the American people and blind them to the real purpose 
of the proposed Federal Reserve Act, the architects of the Aldrich Plan, 
powerful Nelson Aldrich, although no longer a senator, and Frank 
Vanderlip, president of the National City Bank, set up a hue and cry against 
the bill. They gave interviews whenever they could find an audience 
denouncing the proposed Federal Reserve Act as inimical to banking and to 
good government. The bugaboo of inflation was raised because of the Act's 
provisions for printing Federal Reserve notes. The Nation, on October 23, 
1913, pointed out, "Mr. Aldrich himself raised a hue and cry over the issue of 
government "fiat money", that is, money issued without gold or bullion back 
of it, although a bill to do precisely that had been passed in 1908 with his own 
name as author, and he knew besides, that the 'government' had nothing to 
do with it, that the Federal Reserve Board would have full charge of the 
issuing of such moneys. " 

Frank Vanderlip's claims were so bizarre that Senator Robert L. Owen, 
chairman of the newly formed Senate Banking and Currency Committee, 
which had been formed on March 18, 1913, accused him of openly carrying 
on a campaign of misrepresentation about the bill. The interests of the 
public, so Carter Glass claimed in a speech on September 10, 1913 to 
Congress, would be protected by an advisory council of bankers. "There can 
be nothing sinister about its transactions. Meeting with it at least four times a 
year will be a bankers' advisory council representing every regional reserve 
district in the system. How could we have exercised greater caution in 
safeguarding the public interests? " 

Glass claimed that the proposed Federal Advisory Council would force the 
Federal Reserve Board of Governors to act in the best interest of the people. 

Senator Root raised the problem of inflation, claiming that under the Federal 
Reserve Act, note circulation would always expand indefinitely, causing great 
inflation. However, the later history of the Federal Reserve 

19 



System showed that it not only caused inflation, but that the issue of notes could also 
be restricted, causing deflation, as occurred from 1929 to 1939. 

One of the critics of the proposed "decentralized" system was a lawyer from 
Cleveland, Ohio, Alfred Crozier: Crozier was called to testify for the Senate 
Committee because he had written a provocative book in 1912, U.S. Money vs. 
Corporation Currency.* He attacked the Aldrich-Vreeland Act of 1908 as a Wall 
Street instrument, and he pointed out that when our government had to issue money 
based on privately owned securities, we were no longer a free nation. 

Crozier testified before the Senate Committee that, "It should prohibit the granting 
or calling in of loans for the purpose of influencing quotation prices of securities and 
the contracting of loans or increasing interest rates in concert by the banks to 
influence public opinion or the action of any legislative body. Within recent months, 
William McAdoo, Secretary of the Treasury of the United States was reported in the 
open press as charging specifically that there was a conspiracy among certain of the 
large banking interests to put a contraction upon the currency and to raise interest 
rates for the sake of making the public force Congress into passing currency 
legislation desired by those interests. The so-called administration currency bill 
grants just what Wall Street and the big banks for twenty-five years have been 
striving for, that is, PRIVATE INSTEAD OF PUBLIC CONTROL OF 
CURRENCY. It does this as completely as the Aldrich Bill. Both measures rob the 
government and the people of all effective control over the public's money, and vest 
in the banks exclusively the dangerous power to make money among the people 
scarce or plenty. The Aldrich Bill puts this power in one central bank. The 
Administration Bill puts it in twelve regional central banks, all owned exclusively by 
the identical private interests that would have owned and operated the Aldrich 
Bank. President Garfield shortly before his assassination declared that whoever 
controls the supply of currency would control the business and activities of the 
people. Thomas Jefferson warned us a hundred years ago that a private central 
bank issuing 

the public currency was a greater menace to the liberties of the people than a 
standing army. " 

It is interesting to note how many assassinations of Presidents of the United States 
follow their concern with the issuing of public currency; Lincoln with his 
Greenback, non-interest-bearing notes, and Garfield, making a pronouncement on 
currency problems just before he was assassinated. 

We now begin to understand why such a lengthy campaign of planned deception 
was necessary, from the secret conference at Jekyll Island to the identical "reform" 
plans proposed by the Democratic and 



* Crozier's book exposed the financiers plan to substitute "corporation currency' 
for the lawful money of the U.S. as guaranteed by Article I, Sec. 8 Para. 5, of the 
Constitution. 

20 



Republican parties under different names. The bankers could not wrest control of 
the issuance of money from the citizens of the United States, to whom it had been 
designated through its Congress by the Constitution, until the Congress granted 
them their monopoly for a central bank. Therefore, much of the influence exerted to 
get the Federal Reserve Act passed was done behind the scenes, principally by two 
shadowy, non-elected persons: The German immigrant, Paul Warburg, and Colonel 
Edward Mandell House of Texas. 

Paul Warburg made an appearance before the House Banking and Currency 
Committee in 1913, in which he briefly stated his background: "I am a member of 
the banking house of Kuhn, Loeb Company. I came over to this country in 1902, 
having been born and educated in the banking business in Hamburg, Germany, and 
studied banking in London and Paris, and have gone all around the world. In the 
Panic of 1907, the first suggestion I made was 'Let us get a national clearing house.' 
The Aldrich Plan contains some things which are simply fundamental rules of 
banking. Your aim in this plan (the Owen-Glass bill) must be the same—centralizing 
of reserves, mobilizing commercial credit, and getting an elastic note issue." 

Warburg's phrase, "mobilization of credit" was an important one, because the First 
World War was due to begin shortly, and the first task of the Federal Reserve 
System would be to finance the World War. The European nations were already 
bankrupt, because they had maintained large standing armies for almost fifty years, 
a situation created by their own central banks, and therefore they could not finance 
a war. A central bank always imposes a tremendous burden on the nation for 
"rearmament" and "defense", in order to create inextinguishable debt, 
simultaneously creating a military dictatorship and enslaving the people to pay the 
"interest" on the debt which the bankers have artificially created. 

In the Senate debate on the Federal Reserve Act, Senator Stone said on December 
12, 1913, 

"The great banks for years have sought to have and control agents in the Treasury 
to serve their purposes. Let me quote from this World article, 'Just as soon as Mr. 
McAdoo came to Washington, a woman whom the National City Bank had installed 
in the Treasury Department to get advance information on the condition of banks, 
and other matters of interest to the big Wall Street group, was removed. 
Immediately the Secretary and the Assistant Secretary, John Skelton Williams, were 
criticized severely by the agents of the Wall Street group.'" 

"I myself have known more than one occasion when bankers refused credit to men 
who opposed their political views and purposes. When Senator Aldrich and others 
were going around the country exploiting this scheme, the big banks of New York 
and Chicago were engaged in 



21 



raising a munificent fund to bolster up the Aldrich propaganda. I have been told by 
bankers of my own state that contributions to this exploitation fund had been 
demanded of them and that they had contributed because they were afraid of being 
blacklisted or boycotted. There are bankers of this country who are enemies of the 
public welfare. In the past, a few great banks have followed policies and projects 
that have paralyzed the industrial energies of the country to perpetuate their 
tremendous power over the financial and business industries of America. " 

Carter Glass states in his autobiography that he was summoned by Woodrow 
Wilson to the White House, and that Wilson told him he intended to make the 
reserve notes obligations of the United States. Glass says, "I was for an instant 
speechless. I remonstrated. There is not any government obligation here, Mr. 
President. Wilson said he had had to compromise on this point in order to save the 
bill." 

The term "compromise" on this point came directly from Paul Warburg. Col. 
Elisha Ely Garrison, in Roosevelt,* Wilson and the Federal Reserve Law wrote, 

"In 1911, Lawrence Abbot, Mr. Roosevelt's private officer at 'The Outlook' handed 
me a copy of the so-called Aldrich Plan for currency reform. I said, I could not 
believe that Mr. Warburg was the author. This plan is nothing more than the 
Aldrich-Vreeland legislation which provided for currency issue against securities. 
Warburg knows that as well as I do. I am going to see him at once and ask him 
about it. All right, the truth. Yes, I wrote it, he said. Why? I asked. It was a 
compromise, answered Warburg. "13 

Garrison says that Warburg wrote him on February 8, 1912. 

"I have no doubt that at the end of a thorough discussion, either you will see it my 
way or I will see it yours—but I hope you will see it mine." 

This was another famous Warburg saying when he secretly lobbied Congressmen to 
support his interest, the veiled threat that they should "see it his way". Those who 
did not found large sums contributed to their opponents at the next elections, and 
usually went down in defeat. 

Col. Garrison, an agent of Brown Brothers bankers, later Brown Brothers 
Harriman, had entree everywhere in the financial community. He writes of Col. 
House, "Col. House agreed entirely with the early writing of Mr. Warburg." Page 
337, he quotes Col. House: 

"I am also suggesting that the Central Board be increased from four members to 
five and their terms lengthened from eight to ten years. This would give stability 
and would take away the power of a President to change the personnel of the board 
during a single term of office." 



* Theodore Roosevelt 



13 Elisha Ely Garrison, Roosevelt, Wilson and the Federal Reserve Law, 
Christopher Publications, Boston, 1931 

22 



House's phrase, "take away the power of a President" is significant, because later 
Presidents found themselves helpless to change the direction of the government 
because they did not have the power to change the composition of the Federal 
Reserve Board to attain a majority on it during that President's term of office. 
Garrison also wrote in this book, 

"Paul Warburg is the man who got the Federal Reserve Act together after the 
Aldrich Plan aroused such nationwide resentment and opposition. The mastermind 
of both plans was Baron Alfred Rothschild of London." 

Colonel Edward Mandell House* was referred to by Rabbi Stephen Wise in his 
autobiography, Challenging Years as "the unofficial Secretary of State". House 
noted that he and Wilson knew that in passing the Federal Reserve Act, they had 
created an instrument more powerful than the Supreme Court. The Federal Reserve 
Board of Governors actually comprised a Supreme Court of Finance, and there was 
no appeal from any of their rulings. 

In 1911, prior to Wilson's taking office as President, House had returned to his 
home in Texas and completed a book called Philip Dru, Administrator. Ostensibly a 
novel, it was actually a detailed plan for the future government of the United States, 
"which would establish Socialism as dreamed by Karl Marx", according to House. 
This "novel" predicted the enactment of the graduated income tax, excess profits 
tax, unemployment insurance, social security, and a flexible currency system. In 
short, it was the blueprint which was later followed by the Woodrow Wilson and 
Franklin D. Roosevelt administrations. It was published "anonymously" by B. W. 
Huebsch of New York, and widely circulated among government officials, who were 
left in no doubt as to its authorship. George Sylvester Viereck**, who knew House 
for years, later wrote an account of the Wilson-House relationship, The Strangest 
Friendship in History. 14 In 1955, Westbrook Pegler, the Hearst columnist from 
1932 to 1956, heard of the Philip Dru book and called Viereck to ask if he had a 
copy. Viereck sent Pegler his copy of the book, and Pegler wrote a column about it, 
stating: 

"One of the institutions outlined in Philip Dru is the Federal Reserve System. The 
Schiffs, the Warburgs, the Kahns, the Rockefellers and Morgans put their faith in 
House. The Schiff, Warburg, Rockefeller and Morgan interests were personally 
represented in the mysterious conference at Jekyll Island. Frankfurter landed on 
the Harvard law faculty, thanks to a financial contribution to Harvard by Felix 
Warburg and Paul 



* See House note in "Biographies" 
** See Viereck note in "Biographies" 



14 George Sylvester Viereck, The Strangest Friendship in History, Woodrow 
Wilson and Col. House, Liveright, New York, 1932 



23 



Warburg, and so we got Alger and Donald Hiss, Lee Pressman, Harry Dexter White 
and many other proteges of Little Weenie."* 

House's openly Socialistic views were forthrightly expressed in Philip Dru, 
Administrator; on pages 57-58, House wrote: 

"In a direct and forceful manner, he pointed out that our civilization was 
fundamentally wrong, inasmuch, among other things, as it restricted efficiency; that 
if society were properly organized, there would be none who were not sufficiently 
clothed and fed. The result, that the laws, habits and ethical training in vogue were 
alike responsible for the inequalities in opportunity and the consequent wide 
difference between the few and the many; that the results of such conditions was to 
render inefficient a large part of the population, the percentage differing in each 
country in the ratio that education and enlightenment and unselfish laws bore to 
ignorance, bigotry and selfish laws." 15 

In his book, House (Dru) envisions himself becoming a dictator and forcing on the 
people his radical views, page 148: "They recognized the fact that Dru dominated 
the situation and that a master mind had at last risen in the Republic. " He now 
assumes the title of General. "General Dru announced his purpose of assuming the 
powers of a dictator . . . they were assured that he was free from any personal 
ambition ... he proclaimed himself 'Administrator of the Republic.'"* 

This pensive dreamer who imagined himself a dictator actually managed to place 
himself in the position of the confidential advisor to the President of the United 
States, and then to have many of his desires enacted into law! On page 227, he lists 
some of the laws he wishes to enact as dictator. Among them are an old age pension 
law, laborers insurance compensation, cooperative markets, a federal reserve 
banking system, cooperative loans, national employment bureaus, and other "social 
legislation", some of which was enacted during Wilson's administration, and others 
during the Franklin D. Roosevelt's administration. The latter was actually a 
continuation of the Wilson Administration, 



* The present writer was with Viereck in his suite at the Hotel Belleclaire when Pegler called 
and asked for the book. Viereck sent it over by his secretary. He grinned and said Pegler 
seemed very excited. "He ought to get a good column out of that," Viereck told me. Indeed 
Pegler did get a good column out of it. Unfortunately for him, he had gone too far in 
mentioning the Warburgs. As long as he confined his attacks to La Grand Bouche (Eleanor 
Roosevelt), and her spouse, he had been permitted to continue, but now that he had exposed 
the Warburg connection with the Communist spy ring in Washington, his column was 
immediately dropped by the big city dailies, and Pegler's long run was over. 

15 Col. Edward M. House, Philip Dru, Administrator, B. W. Heubsch, New York, 1912. 

* This quotation from Philip Dru, Administrator, written by Col. House in 1912, is included 
here to show his totalitarian Marxist philosophy. House was to become for 8 years with 
Wilson, the President's closest advisor. Later he continued his influence in the Franklin D. 
Roosevelt administration. From his home in Magnolia, Mass., House advised FDR through 
frequent trips of Felix Frankfurter to the White House. Frankfurter was later appointed to 
the Supreme Court by F.D.R. 

24 



with many of the same personnel, and with House guiding the administration from 
behind the scenes. 

Like most of the behind-the-scenes operators in this book, Col. Edward Mandell 
House had the obligatory "London connection". Originally a Dutch family, "Huis", 
his ancestors had lived in England for three hundred years, after which his father 
settled in Texas, where he made a fortune in blockade-running during the Civil 
War, shipping cotton and other contraband to his British connections, including the 
Rothschilds, and bringing back supplies for the beleaguered Texans. The senior 
House, not trusting the volatile Texas situation, prudently deposited all his profits 
from his blockade-running in gold with Baring banking house in London*. At the 
close of the Civil War, he was one of the wealthiest men in Texas. He named his son 
"Mandell" after one of his merchant associates. According to Arthur Howden 
Smith, when House's father died in 1880, his estate was distributed among his sons 
as follows: Thomas William got the banking business; John, the sugar plantation; 
and Edward M. the cotton plantations, which brought him an income of $20,000 a 
year. 16 

At the age of twelve, the young Edward Mandell House had brain fever, and was 
later further crippled by sunstroke. He was a semi-invalid, and his ailments gave 
him an odd Oriental appearance. He never entered any profession, but used his 
father's money to become the kingmaker of Texas politics, successively electing five 
governors from 1893 to 1911. In 1911 he began to support Wilson for president, and 
threw the crucial Texas delegation to him which ensured his nomination. House met 
Wilson for the first time at the Hotel Gotham, May 31, 1912. 

In The Strangest Friendship In History, Woodrow Wilson and Col. House, by 
George Sylvester Viereck, Viereck writes: 

"What," I asked House, "cemented your friendship?" "The identity of our 
temperaments and our public policies," answered House. "What was your purpose 
and his?" "To translate into legislation certain liberal and progressive ideas." 17 

House told Viereck that when he went to Wilson at the White 



* Dope, Inc., identifies Barings as follows: "Baring Brothers, the premier merchant bank of 
the opium trade from 1783 to the present day, also maintained close contact with the Boston 
families . . . The group's leading banker became, at the close of the 19* century, the House of 
Morgan— which also took its cut in Eastern opium traffic . . . Morgan's Far Eastern 
operations were the officially conducted British opium traffic . . . Morgan's case deserves 
special scrutiny from American police and regulatory agencies, for the intimate associations 
of Morgan Guaranty Trust with the identified leadership of the British dope banks." 

16 Arthur Howden Smith, The Real Col. House, Doran Company, New York, 1918 

17 George Sylvester Viereck, The Strangest Friendship in History, Woodrow Wilson and 
Col. House, Liveright, New York, 1932 



25 



House, he handed him $35,000. This was exceeded only by the $50,000 which Bernard 
Baruch had given Wilson. 

The successful enactment of House's programs did not escape the notice of other Wilson 
associates. In Vol. 1, page 157 of The Intimate Papers of Col. House, House notes, "Cabinet 
members like Mr. Lane and Mr. Bryan commented upon the influence of Dru with the 
President. 'AH that the book has said should be,' wrote Lane, 'comes about. The President 
comes to 'Philip Dru' in the end.' "18 

House recorded some of his efforts on behalf of the Federal Reserve Act in The Intimate 
Papers of Col. House, "December 19, 1912. 1 talked with Paul Warburg over the phone 
concerning currency reform. I told of my trip to Washington and what I had done there to 
get it in working order. I told him that the Senate and the Congressmen seemed anxious to 
do what he desired, and that President-elect Wilson thought straight concerning the 
issue. "19 

Thus we have Warburg's agent in Washington, Col. House, assuring him that the Senate and 
Congressmen will do what he desires, and that the President-elect "thought straight 
concerning the issue." In this context, representative government seems to have ceased to 
exist. House continues in his "Papers": 

"March 13, 1913. Warburg and I had an intimate discussion concerning currency reform. 

March 27, 1913. Mr. J.P. Morgan, Jr. and Mr. Denny of his firm came promptly at five. 

McAdoo came about ten minutes afterward. Morgan had a currency plan already 
printed. I suggested he have it typewritten, so it would not seem too prearranged, 
and send it to Wilson and myself today. 

July 23, 1913. 1 tried to show Mayor Quincy (of Boston) the folly of the Eastern 
bankers taking an antagonistic attitude towards the Currency Bill. I explained to 
Major Henry Higginson* with what care the bill had been framed. Just before he 
arrived, I had finished a review by Professor Sprague of Harvard of Paul 
Warburg's criticism of the Glass-Owen Bill, and will transmit it to Washington 
tomorrow. Every banker known to Warburg, who knows the subject practically, has 
been called up about the making of the bill. 

October 13, 1913. Paul Warburg was my first caller today. He came to discuss the 
currency measure. There are many features of the Owen-Glass Bill that he does not 
approve. I promised to put him in touch with McAdoo and Senator Owen so that he 
might discuss it with them. 

November 17, 1913. Paul Warburg telephoned about his trip to Washington. Later, 
he and Mr. Jacob Schiff came over for a few minutes. 



18 Col. Edward Mandell House, The Intimate Papers of Col. House, edited by Charles 
Seymour, Houghton Mifflin Co., 1926-28, Vol. 1, p. 157 

19 Ibid. Vol. 1, p. 163 

* The most prominent banker in Boston. 



26 



Warburg did most of the talking. He had a new suggestion in regard to 
grouping the regular reserve banks so as to get the units welded together 
and in easier touch with the Federal Reserve Board." 

George Sylvester Viereck in The Strangest Friendship in History, Woodrow Wilson 
and Col. House wrote: "The Schiffs, the Warburgs, the Kahns, the Rockefellers, the 
Morgans put their faith in House. When the Federal Reserve legislation at last 
assumed definite shape, House was the intermediary between the White House and 
the financiers. "20 

On page 45, Viereck notes, "Col. House looks upon the reform of the monetary 
system as the crowning internal achievement of the Wilson Administration. "21 

The Glass Bill (the House version of the final Federal Reserve Act) had passed the 
House on September 18, 1913 by 287 to 85. On December 19, 1913, the Senate 
passed their version by a vote of 54-34. More than forty important differences in the 
House and Senate versions remained to be settled, and the opponents of the bill in 
both houses of Congress were led to believe that many weeks would yet elapse 
before the Conference bill would be ready for consideration. The Congressmen 
prepared to leave Washington for the annual Christmas recess, assured that the 
Conference bill would not be brought up until the following year. Now the money 
creators prepared and executed the most brilliant stroke of their plan. In a single 
day, they ironed out all forty of the disputed passages in the bill and quickly 
brought it to a vote. On Monday, December 22, 1913, the bill was passed by the 
House 282-60 and the Senate 43-23. 

On December 21, 1913, The New York Times commented editorially on the act, 
"New York will be on a firmer basis of financial growth, and we shall soon see her 
the money centre of the world." 

The New York Times reported on the front page, Monday, December 22, 1913 in 
headlines: MONEY BILL MAY BE LAW TODAY -CONFEREES HAD 
ADJUSTED NEARLY ALL DIFFERENCES AT 1:30 THIS MORNING-NO 
DEPOSIT GUARANTEES -SENATE YIELDS ON THIS POINT BUT PUTS 
THROUGH MANY OTHER CHANGES "With almost unprecedented speed, the 
conference to adjust the House and Senate differences on the Currency Bill 
practically completed its labours early this morning. On Saturday the Conferees did 
little more than dispose of the preliminaries, leaving forty essential differences to be 
thrashed out Sunday. . . . No other legislation of importance will be taken up in 
either House of Congress this week. Members of both houses are already preparing 
to leave Washington. " 



20 George Sylvester Viereck, The Strangest Friendship In History, Woodrow 
Wilson and Col. House, Liveright, New York, 1932 

21 Ibid. 

27 



"Unprecedented speed", says The New York Times. One sees the fine hand of Paul 
Warburg in this final strategy. Some of the bill's most vocal critics had already left 
Washington. It was a long-standing political courtesy that important legislation 
would not be acted upon during the week before Christmas, but this tradition was 
rudely shattered in order to perpetrate the Federal Reserve Act on the American 
people. 

The Times buried a brief quote from Congressman Lindbergh that "the bill would 
establish the most gigantic trust on earth," and quoted Representative Guernsey of 
Maine, a Republican on the House Banking and Currency Committee, that "This is 
an inflation bill, the only question being the extent of the inflation." 

Congressman Lindbergh said on that historic day, to the House: 

"This Act establishes the most gigantic trust on earth. When the President signs this 
bill, the invisible government by the Monetary Power will be legalized. The people 
may not know it immediately, but the day of reckoning is only a few years removed. 
The trusts will soon realize that they have gone too far even for their own good. The 
people must make a declaration of independence to relieve themselves from the 
Monetary Power. This they will be able to do by taking control of Congress. Wall 
Streeters could not cheat us if you Senators and Representatives did not make a 
humbug of Congress. ... If we had a people's Congress, there would be stability. 
The greatest crime of Congress is its currency system. The worst legislative crime of 
the ages is perpetrated by this banking bill. The caucus and the party bosses have 
again operated and prevented the people from getting the benefit of their own 
government." 

The December 23, 1913 New York Times editorially commented, in contrast to 
Congressman Lindbergh's criticism of the bill, "The Banking and Currency Bill 
became better and sounder every time it was sent from one end of the Capitol to the 
other. Congress worked under public supervision in making the bill." 

By "public supervision", The Times apparently meant Paul Warburg, who for 
several days had maintained a small office in the Capitol building, where he directed 
the successful pre-Christmas campaign to pass the bill, and where Senators and 
Congressmen came hourly at his bidding to carry out his strategy. 

The "unprecedented speed" with which the Federal Reserve Act had been passed by 
Congress during what became known as "the Christmas massacre" had one 
unforeseen aspect. Woodrow Wilson was taken unaware, as he, like many others, 
had been assured the bill would not come up for a vote until after Christmas. Now 
he refused to sign it, because he objected to the provisions for the selection of Class 
B. Directors. William L. White relates in his biography of Bernard Baruch that 
Baruch, a principal contributor to Wilson's campaign fund, was stunned when he 
was informed that Wilson refused to sign the bill. He hurried 



28 



to the White House and assured Wilson that this was a minor matter, which could 
be fixed up later through "administrative processes". The important thing was to 
get the Federal Reserve Act signed into law at once. With this reassurance, Wilson 
signed the Federal Reserve Act on December 23, 1913. History proved that on that 
day, the Constitution ceased to be the governing covenant of the American people, 
and our liberties were handed over to a small group of international bankers. 

The December 24, 1913 New York Times carried a front page headline "WILSON 
SIGNS THE CURRENCY BILL!" Below it, also in capital letters, were two further 
headlines, "PROSPERITY TO BE FREE" and "WILL HELP EVERY CLASS". 
Who could object to any law which provided benefits to everyone? The Times 
described the festive atmosphere while Wilson's family and government officials 
watched him sign the bill. "The Christmas spirit pervaded the gathering," exulted 
The Times. 

In his biography of Carter Glass, Rixey Smith states that those present at the 
signing of the bill included Vice President Marshall, Secretary Bryan, Carter Glass, 
Senator Owen, Secretary McAdoo, Speaker Champ Clark, and other Treasury 
officials. None of the real writers of the bill, the draftees of Jekyll Island, were 
present. They had prudently absented themselves from the scene of their victory. 
Rixey Smith also wrote, "It was as though Christmas had come two days early." On 
December 24, 1913, Jacob Schiff wrote to Col. House, 

"My dear Col. House. I want to say a word to you for the silent, but no doubt 
effective work you 

have done in the interest of currency legislation and to congratulate you that the 
measure 

has finally been enacted into law. I am with good wishes, faithfully yours, JACOB 
SCHIFF." 

Representative Moore of Kansas, in commenting on the passage of the Act, said to 
the House of Representatives: 

"The President of the United States now becomes the absolute dictator of all the 
finances of the country. He appoints a controlling board of seven men, all of whom 
belong to his political party, even though it is a minority. The Secretary of the 
Treasury is to rule supreme whenever there is a difference of opinion between 
himself and the Federal Reserve Board. AND, only one member of the Board is to 
pass out of office while the President is in office. " 

The ten year terms of office of the members of the Board were lengthened by the 
Banking Act of 1935 to fourteen years, which meant that these directors of the 
nation's finances, although not elected by the people, held office longer than three 
presidents. 

While Col. House, Jacob Schiff and Paul Warburg basked in the glow of a job well done, the 
other actors in this drama were subject to later afterthoughts. Woodrow Wilson wrote in 
1916, National Economy and the Banking System, Sen. Doc. No. 3, No. 223, 76th Congress, 
1st session, 1939: "Our system of credit is concentrated (in the Federal Reserve 

29 



System). The growth of the nation, therefore, and all our activities, are in the hands 
of a few men." 

When he was asked by Clarence W. Barron whether he approved of the bill as it 
was finally passed. Warburg remarked, "Well, it hasn't got quite everything we 
want, but the lack can be adjusted later by administrative processes." 

Woodrow Wilson and Carter Glass are given credit for the Act by most 
contemporary historians, but of all those concerned, Wilson had least to do with 
Congressional action on the bill. George Creel, a veteran Washington 
correspondent, wrote in Harper's Weekly, June 26, 1915: 

"As far as the Democratic Party was concerned, Woodrow Wilson was without 
influence, save for the patronage he possessed. It was Bryan who whipped Congress 
into line on the tariff bill, on the Panama Canal tolls repeal, and on the currency 
bill." Mr. Bryan later wrote, "That is the one thing in my public career that I 
regret—my work to secure the enactment of the Federal Reserve Law." 

On December 25, 1913, The Nation pointed out that "The New York Stock Market 
began to rise steadily upon news that the Senate was ready to pass the Federal 
Reserve Act." 

This belies the claim that the Federal Reserve Act was a monetary reform bill. The 
New York Stock Exchange is generally considered an accurate barometer of the 
true meaning of any financial legislation passed in Washington. Senator Aldrich 
also decided that he no longer had misgivings about the Federal Reserve Act. In a 
magazine which he owned, and which he called The Independent, he wrote in July, 
1914: "Before the passage of this Act, the New York bankers could only dominate 
the reserves of New York. Now we are able to dominate the bank reserves of the 
entire country. " 

H.W. Loucks denounced the Federal Reserve Act in The Great Conspiracy of the 
House of Morgan, "In the Federal Reserve Law, they have wrested from the people 
and secured for themselves the constitutional power to issue money and regulate the 
value thereof." On page 31, Loucks writes, "The House of Morgan is now in 
supreme control of our industry, commerce and political affairs. 

They are in complete control of the policy making of the Democratic, Republican 
and Progressive parties. The present extraordinary propaganda for 'preparedness' 
is planned more for home coercion than for defense against foreign aggression. "22 

The signing of the Federal Reserve Act by Woodrow Wilson represented the 
culmination of years of collusion with his intimate friend, Col. House, and Paul 
Warburg. One of the men with whom House became acquainted in the Wilson 
Administration was Franklin D. 



22 H.W. Loucks, The Great Conspiracy of the House of Morgan, Privately 
printed, 1916 

30 



Roosevelt, Assistant Secretary of Navy. As soon as he obtained the Democratic 
nomination for President, in 1932, Franklin D. Roosevelt made a "pilgrimage" to 
Col. House's home at Magnolia, Mass. Roosevelt, after the Republican hiatus of the 
1920s, filled in the goals of Philip Dru, Administrator,23 which Wilson had not been 
able to carry out. The late Roosevelt achievements included the enactment of the 
social security program, excess profits tax, and the expansion of the graduated 
income tax to 90% of earned income. 

House's biographer, Charles Seymour, wrote: "He was wearied by the details of 
party politics and appointments. Even the share he had taken in constructive 
domestic legislation (the Federal Reserve Act, tariff revision, and the Income Tax 
amendment) did not satisfy him. From the beginning of 1914 he gave more and 
more of his time to what he regarded as the highest form of politics and that for 
which he was particularly suited—international affairs. "24 

In 1938, shortly before he died, House told Charles Seymour, "During the last 
fifteen years I have been close to the center of things, although few people suspect it. 
No important foreigner has come to the United States without talking to me. I was 
close to the movement that nominated Roosevelt. He has given me a free hand in 
advising him. All the Ambassadors have reported to me frequently." 

A comparative print of the Federal Reserve Act of 1913 as passed by the House of 
Representatives and amended by the Senate shows the following striking change: 

The Senate struck out, "To suspend the officials of Federal Reserve banks for cause, 
stated in writing with opportunity of hearing, require the removal of said official for 
incompetency, dereliction of duty, fraud or deceit, such removal to be subject to 
approval by the President of the United States. " This was changed by the Senate to 
read "To suspend or remove any officer or director of any Federal Reserve Bank, 
the cause of such removal to be forthwith communicated in writing by the Federal 
Reserve Board to the removed officer or director and to said bank." This completely 
altered the conditions under which an officer or director might be removed. We no 
longer know what the conditions for removal are, or the cause. Apparently 
incompetency, dereliction of duty, fraud or deceit do not matter to the Federal 
Reserve Board. Also, the removed officer does not have the opportunity of appeal to 
the President. In answer to written inquiry, the Assistant Secretary of the Federal 
Reserve Board replied that only one officer has been removed "for cause" in the 
thirty-six years, the name and details of this matter being a "private concern" 
between the individual, the Reserve Bank concerned, and the Federal Reserve 
Board. 



23 E.M. House, Philip Dru, Administrator, B. W. Heubsch, N.Y., 1912 

24 Col. E.M. House, The Intimate Papers of Col. House, 4 v. 1926-1928, 
Houghton Mifflin Co. 



31 



The Federal Reserve System began its operations in 1914 with the activity of 
the Organization Committee, appointed by Woodrow Wilson, and composed 
of Secretary of the Treasury William McAdoo, who was his son-in-law, 
Secretary of Agriculture Houston and Comptroller of the Currency John 
Skelton Williams. 

On January 6, 1914, J.P. Morgan met with the Organizing Committee in 
New York. He informed them that there should not be more than seven 
regional districts in the new system. 

This committee was to select the locations of the "decentralized" reserve 
banks. They were empowered to select from eight to twelve reserve banks, 
although J.P. Morgan had testified he thought that not more than four 
should be selected. Much politicking went into the selection of these sites, as 
the twelve cities thus favored would become enormously important as centers 
of finance. New York, of course, was a foregone conclusion. Richmond was 
the next selection, as a payoff to Carter Glass and Woodrow Wilson, the two 
Virginians who had been given political credit for the Federal Reserve Act. 
The other selections of the Committee were Boston, Philadelphia, Cleveland, 
Chicago, St. Louis, Atlanta, Dallas, Minneapolis, Kansas City, and San 
Francisco. All of these cities later developed important "financial districts" 
as the result of this selection. 

These local battles, however, paled in view of the complete dominance of the 
Federal Reserve bank of New York in the system. Ferdinand Lundberg 
pointed out, in America's Sixty Families, that, "In practice, the Federal 
Reserve Bank of New York became the fountainhead of the system of twelve 
regional banks, for New York was the money market of the nation. The other 
eleven banks were so many expensive mausoleums erected to salve the local 
pride and quell the Jacksonian fears of the hinterland. Benjamin Strong, 
president of the Bankers Trust (J.P. Morgan) was selected as the first 
Governor of the New York Federal Reserve Bank. Adept in high finance, 
Strong for many years manipulated the country's monetary system at the 
discretion of directors representing the leading New York banks. Under 
Strong, the Reserve System was brought into interlocking relations with the 
Bank of England and the Bank of France. Benjamin Strong held his position 
as Governor of the Federal Reserve Bank of New York until his sudden 
death in 1928, during a Congressional investigation of the secret meetings 
between Reserve Governors and 



32 



heads of European central banks which brought on the Great Depression of 1929- 
31."25 

Strong had married the daughter of the President of Bankers Trust, which brought 
him into the line of succession in the dynastic intrigues which play such an 
important role in the world of high finance. He also had been a member of the 
original Jekyll Island group, the First Name Club, and was thus qualified for the 
highest position in the Federal Reserve System, as the Governor of the Federal 
Reserve Bank of New York which dominated the entire system. 

Paul Warburg also is mentioned in J. Laurence Laughlin's definitive volume, The 
Federal Reserve Act, Its Origins and Purposes, 

"Mr. Paul Warburg of Kuhn, Loeb Company offered in March, 1910 a fairly well 
thought out plan to be known as the United Reserve Bank of the United States. This 
was published in The New York Times of March 24, 1910. The group interested in 
the purposes of the National Monetary Commission met secretly at Jekyll Island for 
about two weeks in December, 1910, and concentrated on the preparation of a bill to 
be presented to Congress by the National Monetary Commission. The men who 
were present at Jekyll Island were Senator Aldrich, H. P. Davison of J.P. Morgan 
Company, Paul Warburg of Kuhn, Loeb Company, Frank Vanderlip of the 
National City Bank, and Charles D. Norton of the First National Bank. No doubt the 
ablest banking mind in the group was that of Mr. Warburg, who had had a 
European banking training. Senator Aldrich had no special training in banking. "26 

A mention of Paul Warburg, written by Harold Kelloch, and titled, "Warburg the 
Revolutionist" appeared in the Century Magazine, May, 1915. Kelloch writes: 

"He imposed his ideas on a nation of a hundred million people . . . Without Mr. 
Warburg there would have been no Federal Reserve Act. The banking house of 
Warburg and Warburg in Hamburg has always been strictly a family business. 
None but a Warburg has been eligible for it, but all Warburgs have been born into 
it. In 1895 he married the daughter of the late Solomon Loeb of Kuhn Loeb 
Company. He became a member of Kuhn Loeb Company in 1902. Mr. Warburg's 
salary from his private business has been approximately a half million a year. Mr. 
Warburg's motives had been purely those of patriotic self-sacrifice." 

The true purposes of the Federal Reserve Act soon began to disillusion many who 
had at first believed in its claims. W. H. Allen wrote in Moody's Magazine, 1916, 

"The purpose of the Federal Reserve Act was to prevent concentration of money in 
the New York banks by making it profitable for country bankers to use their funds 
at home, but the movement of currency shows 



25 Ferdinand Lundberg, America's Sixty Families, 1937 

26 J. Laurence Laughlin, The Federal Reserve Act, It's Origins and Purposes 

33 



that the New York banks gained from the interior in every month except 
December, 1915, since the Act went into effect. The stabilization of rates has 
taken place in New York alone. In other parts, high rates continue. The Act, 
which was to deprive Wall Street of its funds for speculation, has really given 
the bulls and the bears such a supply as they have never had before. The 
truth is that far from having clogged the channel to Wall Street, as Mr. Glass 
so confidently boasted, it actually widened the old channels and opened up 
two new ones. The first of these leads directly to Washington and gives Wall 
Street a string on all the surplus cash in the United States Treasury. Besides, 
in the power to issue bank-note currency, it furnishes an inexhaustible 
supply of credit money; the second channel leads to the great central banks 
of Europe, whereby, through the sale of acceptances, virtually guaranteed by 
the United States Government, Wall Street is granted immunity from foreign 
demands for gold which have precipitated every great crisis in our history. " 

For many years, there has been considerable mystery about who actually 
owns the stock of the Federal Reserve Banks. Congressman Wright Patman, 
leading critic of the System, tried to find out who the stockholders were. The 
stock in the original twelve regional Federal Reserve Banks was purchased 
by national banks in those twelve regions. Because the Federal Reserve Bank 
of New York was to set the interest rates and direct open market operations, 
thus controlling the daily supply and price of money throughout the United 
States, it is the stockholders of that bank who are the real directors of the 
entire system. For the first time, it can be revealed who those stockholders 
are. This writer has the original organization certificates of the twelve 
Federal Reserve Banks, giving the ownership of shares by the national banks 
in each district. The Federal Reserve Bank of New York issued 203,053 
shares, and, as filed with the Comptroller of the Currency May 19, 1914, the 
large New York City banks took more than half of the outstanding shares. 
The Rockefeller Kuhn, Loeb-controlled National City Bank took the largest 
number of shares of any bank, 30,000 shares. J.P. Morgan's First National 
Bank took 15,000 shares. When these two banks merged in 1955, they owned 
in one block almost one fourth of the shares in the Federal Reserve Bank of 
New York, which controlled the entire system, and thus they could name 
Paul Volcker or anyone else they chose to be Chairman of the Federal 
Reserve Board of Governors. Chase National Bank took 6,000 shares. The 
Marine Nation Bank of Buffalo, later known as Marine Midland, took 6,000 
shares. This bank was owned by the Schoellkopf family, which controlled 
Niagara Power Company and other large interests. National Bank of 
Commerce of New York City took 21,000 shares. The shareholders of these 
banks which own the stock of the Federal Reserve Bank of New York are the 
people who have controlled our political and economic destinies since 1914. 
They are the Rothschilds, of Europe, Lazard Freres (Eugene Meyer), Kuhn 
Loeb Company, Warburg Company, Lehman Brothers, 

34 



Goldman Sachs, the Rockefeller family, and the J.P. Morgan interests. These 
interests have merged and consolidated in recent years, so that the control is 
much more concentrated. National Bank of Commerce is now Morgan 
Guaranty Trust Company. Lehman Brothers has merged with Kuhn, Loeb 
Company, First National Bank has merged with the National City Bank, and 
in the other eleven Federal Reserve Districts, these same shareholders 
indirectly own or control shares in those banks, with the other shares owned 
by the leading families in those areas who own or control the principal 
industries in these regions.* The "local" families set up regional councils, on 
orders from New York, of such groups as the Council on Foreign Relations, 
The Trilateral Commission, and other instruments of control devised by 
their masters. They finance and control political developments in their area, 
name candidates, and are seldom successfully opposed in their plans. 

With the setting up of the twelve "financial districts" through the Federal 
Reserve Banks, the traditional division of the United States into the forty- 
eight states was overthrown, and we entered the era of "regionalism", or 
twelve regions which had no relation to the traditional state boundaries. 

These developments following the passing of the Federal Reserve Act proved 
every one of the allegations Thomas Jefferson had made against a central 
bank in 1791: that the subscribers to the Federal Reserve Bank stock had 
formed a corporation, whose stock could be and was held by aliens; that this 
stock would be transmitted to a certain line of successors; that it would be 
placed beyond forfeiture and escheat; that they would receive a monopoly of 
banking, which was against the laws of monopoly; and that they now had the 
power to make laws, paramount to the laws of the states. No state legislature 
can countermand any of the laws laid down by the Federal Reserve Board of 
Governors for the benefit of their private stockholders. This board issues 
laws as to what the interest rate shall be, what the quantity of money shall be 
and what the price of money shall be. All of these powers abrogate the 
powers of the state legislatures and their responsibility to the citizens of those 
states. 

The New York Times stated that the Federal Reserve Banks would be ready 
for business on August 1, 1914, but they actually began operations on 
November 16, 1914. At that time, their total assets were listed at 
$143,000,000, from the sale of shares in the Federal Reserve Banks to 
stockholders of the national banks which subscribed to it. 

The actual part of this $143,000,000 which was paid in for these shares 
remains shrouded in mystery. Some historians believe that the shareholders 
only paid about half of the amount in cash; others believe 



* See charts V through IX 

35 



that they paid in no cash at all, but merely sent in checks which they drew on 
the national banks which they owned. This seems most likely, that from the 
very outset, the Federal Reserve operations were "paper issued against 
paper", that bookkeeping entries comprised the only values which changed 
hands. 

The men whom President Woodrow Wilson chose to make up the first 
Federal Reserve Board of Governors were men drawn from the banking 
group. He had been nominated for the Presidency by the Democratic Party, 
which had claimed to represent the "common man" against the "vested 
interests". According to Wilson himself, he was allowed to choose only one 
man for the Federal Reserve Board. The others were chosen by the New 
York bankers. Wilson's choice was Thomas D. Jones, a trustee of Princeton 
and director of International Harvester and other corporations. The other 
members were Adolph C. Miller, economist from Rockefeller's University of 
Chicago and Morgan's Harvard University, and also serving as Assistant 
Secretary of the Interior; Charles S. Hamlin, who had served previously as 
an Assistant Secretary to the Treasury for eight years; F.A. Delano, a 
Roosevelt relative, and railroad operator who took over a number of 
railroads for Kuhn, Loeb Company, W.P.G. Harding, President of the First 
National Bank of Atlanta; and Paul Warburg of Kuhn, Loeb Company. 
According to The Intimate Papers of Col. House, Warburg was appointed 
because "The President accepted (House's) suggestion of Paul Warburg of 
New York because of his interest and experience in currency problems under 
both Republican and Democratic Administrations. "27 Like Warburg, 
Delano had also been born outside the continental limits of the United States, 
although he was an American citizen. Delano's father, Warren Delano, 
according to Dr. Josephson and other authorities, was active in Hong Kong 
in the Chinese opium trade, and Frederick Delano was born in Hong Kong in 
1863. 

In The Money Power of Europe, Paul Emden writes that "The Warburgs 
reached their outstanding eminence during the last twenty years of the past 
century, simultaneously with the growth of Kuhn, Loeb Company in New 
York, with whom they stood in a personal union and family relationship. 
Paul Warburg with magnificent success carried through in 1913 the 
reorganization of the American banking system, at which he had with 
Senator Aldrich been working since 1911, and thus most thoroughly 
consolidated the currency and finances of the United States. "28 



27 Charles Seymour, The Intimate Papers of Col. House, 4 v. 1926-1928, 
Houghton Mifflin Co. 

28 Paul Emden, The Money Power of Europe in the 19th and 20th Century, 
S. Low, Marston Co., London, 1937 

36 



The New York Times* had noted on May 6, 1914 that Paul Warburg had 
"retired" from Kuhn, Loeb Company in order to serve on the Federal 
Reserve Board, although he had not resigned his directorships of American 
Surety Company, Baltimore and Ohio Railroad, National Railways of 
Mexico, Wells Fargo, or Westinghouse Electric Corporation, but would 
continue to serve on these boards of directors. "Who's Who" listed him as 
holding these directorships and in addition, American I.G. Chemical 
Company (branch of I.G. Farben), Agfa Ansco Corporation, Westinghouse 
Acceptance Company, Warburg Company of Amsterdam, chairman of the 
Board of International Acceptance Bank, and numerous other banks, 
railways and corporations. "Kuhn Loeb & Co. with Warburg have four 
votes or the majority of the Federal Reserve Board. "29 

Despite his retirement from Kuhn, Loeb Company in May of 1914 to serve 
on the Federal Reserve Board of Governors, Warburg was asked to appear 
before a Senate Subcommittee in June of 1914 and answer some questions 
about his behind-the-scenes role in getting the Federal Reserve Act through 
Congress. This might have meant some questions about the secret conference 
in Jekyll Island, and Warburg refused to appear. On July 7, 1914 he wrote a 
letter to G.M. Hitchcock, Chairman of the Senate Banking and Currency 
Committee, stating that it might impair his usefulness on the Board if he 
were required to answer any questions, and that he would therefore 
withdraw his name. It seemed that Warburg was prepared to bluff the 
Senate Committee into confirming him without any questions asked. On July 
10, 1914, The New York Times defended Warburg on the editorial page and 
denounced the "Senatorial Inquisition". Since Warburg had not yet been 
asked any questions, the term "Inquisition" seemed remarkably 
inappropriate, nor was there any real danger that the Senators were 
preparing to use instruments of torture on Mr. Warburg. The imbroglio was 
resolved when the Senate Committee, in abject surrender, agreed that Mr. 
Warburg would be given a list of questions in advance of his appearance so 
that he could go over them, and that he could be excused from answering any 
questions which might tend to impair his service on the Board of Governors. 
The Nation reported on July 23, 1914 that "Mr. Warburg finally had a 
conference with Senator O'Gorman and agreed to meet the members of the 
Senate Subcommittee informally, with a view to coming to an understanding, 
and to giving them any reasonable information they might desire. The 
opinion in Washington is that Mr. Warburg's confirmation is assured." The 
Nation 



* The New York Times April 30, 1914, reported that the 12 districts had subscriptions of 
$74,740,800 and that the subscribing banks would pay one-half of this sum in six months. 

29 Clarence W. Barron, More They Told Barron, Arno Press, New York Times, 1973, June 
12, 1914. p. 204 

37 



was correct. Mr. Warburg was confirmed, the way having been smoothed by 
his "fixer", Senator O' Gorman of New York, more familiarly known as "the 
Senator from Wall Street". Senator Robert L. Owen had previously charged 
that Warburg was the American representative of the Rothschild family, but 
questioning him about this would indeed have smacked of the mediaeval 
"Inquisition", and his fellow Senators were too civilized to indulge in such 
barbarity*. 

During the Senate Hearings on Paul Warburg before the Senate Banking and 
Currency Committee, August 1, 1914, Senator Bristow asked, "How many of 
these partners (of Kuhn, Loeb Company) are American citizens?" 
WARBURG: "They are all American citizens except Mr. Kahn. He is a 
British subject." BRISTOW: "He was at one time a candidate for 
Parliament, was he not?" WARBURG: "There was talk about it, it had been 
suggested and he had it in his mind. " 

Paul Warburg also stated to the Committee, "I went to England, where I 
stayed for two years, first in the banking and discount firm of Samuel 
Montague & Company. After that I went to France, where I stayed in a 
French bank. " 

CHAIRMAN: "What French bank was that?" WARBURG: "It is the 
Russian bank for foreign trade which has an agency in Paris." 

BRISTOW: "I understand you to say that you were a Republican, but when 
Mr. Theodore Roosevelt came around, you then became a sympathizer with 
Mr. Wilson and supported him?" WARBURG: "Yes." BRISTOW: "While 
your brother (Felix Warburg) was supporting Taft?" WARBURG: "Yes." 
Thus three partners of Kuhn, Loeb Company were supporting three 
different candidates for President of the United States. Paul Warburg was 
supporting Wilson, Felix Warburg was supporting Taft, and Otto Kahn was 
supporting Theodore Roosevelt. Paul Warburg explained this curious 
situation by telling the Committee that they had no influence over each 
other's political beliefs, "as finance and politics don't mix." 

Questions about Warburg's appointment vanished in a hue and cry with Wilson's 
sole appointment to the Board of Governors, Thomas B. Jones. Reporters had 
discovered that Jones, at the time of his appointment, was under indictment by the 
Attorney General of the United States. Wilson leaped to the defense of his choice, 
telling reporters that "The majority of the men connected with what we have come 
to call 'big business' are honest, incorruptible and patriotic." Despite Wilson's 
protestations, the Senate Banking and Currency Committee scheduled hearings on 
the fitness of 



* Warburg was confirmed August 8, 1914, 38-11, and principally opposed by Sen. Bristow of Kansas, 
who was denounced by The New York Times as a "radical Republican", and whose excellent library of 
rare books on banking were acquired by the present writer in 1983 for research on this work. 

38 



Thomas D. Jones to be a member of the Board of Governors. Wilson then 
wrote a letter to Senator Robert L. Owen, Chairman of that Committee: 



White House 
June 18, 1914 
Dear Senator Owen: 



Mr. Jones has always stood for the rights of the people against the rights of 
privilege. His connection with the Harvester Company was a public service, 
not a private interest. He is the one man of the whole number who was in a 
peculiar sense my personal choice. 

Sincerely, 

Woodrow Wilson 



Woodrow Wilson said, "There is no reason to believe that the unfavorable 
report represents the attitude of the Senate itself. " After several weeks, 
Thomas D. Jones withdrew his name, and the country had to do without his 
services. 

The other members of the first Board of Governors were Secretary of the 
Treasury, William McAdoo, Wilson's son-in-law, and President of the 
Hudson-Manhattan Railroad, a Kuhn, Loeb Company controlled enterprise, 
and Comptroller of the Currency John Skelton Williams. 

When the Federal Reserve Banks were opened for business on November 16, 
1914, Paul Warburg said, "This date may be considered as the Fourth of 
July in the economic history of the United States." 



39 



CHAPTER FOUR 

The Federal Advisory Council 



In steamrolling the Federal Reserve Act through the House of 
Representatives, Congressman Carter Glass declared on September 30, 1913 
on the floor of the House that the interests of the public would be protected 
by an advisory council of bankers. "There can be nothing sinister about its 
transactions. Meeting with it at least four times a year will be a bankers' 
advisory council representing every regional reserve district in the system. 
How could we have exercised greater caution in safeguarding the public 
interest? 

Carter Glass neither then nor later gave any substantiation for his belief that 
a group of bankers would protect the interests of the public, nor is there any 
evidence in the history of the United States that any group of bankers has 
ever done so. In fact, the Federal Advisory Council proved to be the 
"administrative process" which Paul Warburg had inserted into the Federal 
Reserve Act to provide just the type of remote but unseen control over the 
System which he desired. When he was asked by financial reporter C.W. 
Barron, just after the Federal Reserve Act was enacted into law by Congress, 
whether he approved of the bill as it was finally passed, Warburg replied, 
"Well, it hasn't got quite everything we want, but the lack can be adjusted 
later by administrative processes." The council proved to be the ideal vehicle 
for Warburg's purposes, as it has functioned for seventy years in almost 
complete anonymity, its members and their business associations, unnoticed 
by the public. 

Senator Robert Owen, chairman of the Senate Banking and Currency 
Committee, had said, as quoted in The New York Times, August 3, 1913 
before passage of the act: 

"The Federal Reserve Act will furnish the bank and industrial and 
commercial interests with the discount of qualified commercial paper and 
thus stabilize our commercial and industrial life. The Federal Reserve banks 
are not intended as money making banks, but to serve a great national 
purpose of accommodating commerce and businessmen and banks, 
safeguard a fixed market for manufactured goods, for agricultural products 
and for labor. There is no reason why the banks should be in control of the 
Federal Reserve system. Stability will make our commerce expand 
healthfully in every direction." 



40 



Senator Owen's optimism was doomed by the domination of the Jekyll Island 
promoters over the initial composition of the Federal Reserve System. Not 
only did the Morgan-Kuhn, Loeb alliance purchase the dominant control of 
stock in the Federal Reserve Bank of New York, with almost half of the 
shares owned by the five New York banks under their control, First National 
Bank, National City Bank, National Bank of Commerce, Chase National 
Bank and Hanover National Bank, but they also persuaded President 
Woodrow Wilson to appoint one of the Jekyll Island group, Paul Warburg, 
to the Federal Reserve Board of Governors. 

Each of the twelve Federal Reserve Banks was to elect a member of the 
Federal Advisory Council, which would meet with the Federal Reserve 
Board of Governors four times a year in Washington, in order to "advise" 
the Board on future monetary policy. This seemed to assure absolute 
democracy, as each of the twelve "advisors", representing a different region 
of the United States, would be expected to speak up for the economic 
interests of his area, and each of the twelve members would have an equal 
vote. The theory may have been admirable in its concept, but the hard facts 
of economic life resulted in a quite different picture. The president of a small 
bank in St. Louis or Cincinnati, sitting in conference with Paul Warburg and 
J.P. Morgan to "advise" them on monetary policy, would be unlikely to 
contradict two of the most powerful international financiers in the world, as 
a scribbled note from either one of them would be sufficient to plunge his 
little bank into bankruptcy. In fact, the small banks of the twelve Federal 
Reserve districts existed only as satellites of the big New York financial 
interests, and were completely at their mercy. Martin Mayer, in The 
Bankers, points out that "J.P. Morgan maintained correspondent 
relationships with many small banks all over the country. "30 The big New 
York banks did not confine themselves to multi-million dollar deals with 
other great financial interests, but carried on many smaller and more routine 
dealings with their "correspondent" banks across the United States. 

Apparently secure in their belief that their activities would never be exposed 
to the public, the Morgan-Kuhn, Loeb interests boldly selected the members 
of the Federal Advisory Council from their correspondent banks and from 
banks in which they owned stock. No one in the financial community seemed 
to notice, as nothing was said about it during seventy years of the Federal 
Reserve System's operation. 

To avoid any suspicion that New York interests might control the Federal 
Advisory Council, its first president, elected in 1914 by the other members, 
was J.B. Forgan, president of the First National Bank of 



30 Martin Mayer, The Bankers, Weybright and Talley, New York, 1974, p. 
207. 

41 



Chicago. Rand McNally Bankers Directory for 1914 lists the principal 
correspondents of the large banks. The principal correspondent bank of the 
Baker-Morgan controlled First National Bank of New York is listed as the 
First National Bank of Chicago. The principal correspondent listed by the 
First National Bank of Chicago is the Bank of Manhattan in New York, 
controlled by Jacob Schiff and Paul Warburg of Kuhn, Loeb Company. 
James B. Forgan also was listed as a director of Equitable Life Insurance 
Company, also controlled by Morgan. However, the relationship between 
First National Bank of Chicago and these New York banks was even closer 
than these listings indicate. 

On page 701 of The Growth of Chicago Banks by F. Cyril James, we find 
mention of "the First National Bank of Chicago's profitable connection with 
the Morgan interests. A goodwill ambassador was hastily sent to New York 
to invite George F. Baker to become a director of the First National Bank of 
Chicago. "31 (J.B. Forgan to Ream, January 7, 1903.) In effect, Baker and 
Morgan had personally chosen the first president of the Federal Advisory 
Council. 

James B. Forgan (1852-1924) also shows the obligatory "London 
Connection" in the operation of the Federal Reserve System. Born in St. 
Andrew's, Scotland, he began his banking career there with the Royal Bank 
of Scotland, a correspondent of the Bank of England. He came to Canada for 
the Bank of British North America, worked for the Bank of Nova Scotia, 
which sent him to Chicago in the 1880's, and by 1900 he had become 
president of the First National Bank of Chicago. He served for six years as 
president of the Federal Advisory Council, and when he left the council, he 
was replaced by Frank O. Wetmore, who had also replaced him as president 
of the First National Bank of Chicago when Forgan was named chairman of 
the board. 

Representing the New York Federal Reserve district on the first Federal 
Advisory Council was J.P. Morgan. He was named chairman of the 
Executive Committee. Thus, Paul Warburg and J.P. Morgan sat in 
conference at the meetings of the Federal Reserve Board during the first four 
years of its operation, surrounded by the other Governors and members of 
the council, who could hardly have been unaware that their futures would be 
guided by these two powerful bankers. 

Another member of the Federal Advisory Council in 1914 was Levi L. Rue, 
representing the Philadelphia district. Rue was president of the Philadelphia 
National Bank. Rand McNally Bankers Directory of 1914 listed as principal 
correspondent of the First National Bank of New York, 



31 F. Cyril James, The Growth of Chicago Banks, Harper, New York, 1938. 

42 



the Philadelphia National Bank. First National Bank of Chicago also listed 
Philadelphia National Bank as its principal correspondent in Philadelphia. 
The other members of the Federal Advisory Council included Daniel S. 
Wing, president of the First National Bank of Boston, W.S. Rowe, president 
of the First National Bank of Cincinnati, and C.T. Jaffray, president of the 
First National Bank of Minneapolis. These were all correspondent banks of 
the New York "big five" banks who controlled the money market in the 
United States. 

Jaffray had an even closer connection with the Baker -Morgan interests. In 
1908, to reinvest the large annual dividends from their First National Bank 
of New York stock, Baker and Morgan set up a holding company, First 
Security Corporation, which bought 500 shares of the First National Bank of 
Minneapolis. Thus Jaffray was little more than a wage-earning employee of 
Baker and Morgan, although he had been "selected" by stockholders of the 
Federal Reserve Bank of Minneapolis to represent their interests. First 
Security Corporation also owned 50,000 shares of Chase National Bank, 5400 
shares of National Bank of Commerce, 2500 shares of Bankers Trust, 928 
shares of Liberty National Bank, the bank of which Henry P. Davison had 
been president when he was tapped to join the J.P. Morgan firm, and shares 
of New York Trust, Atlantic Trust and Brooklyn Trust. First Security 
concentrated on bank stocks which rapidly appreciated in value, and paid 
handsome annual dividends. In 1927, it earned five million dollars, but paid 
the shareholders eight million, taking the rest from its surplus. 

Another member of the initial Federal Advisory Council was E.F. Swinney, 
president of the First National Bank of Kansas City. He was also a director of 
Southern Railway, and lists himself in Who's Who as "independent in 
politics". 

Archibald Kains represented the San Francisco district on the Federal 
Advisory Council, although he maintained his office in New York, as 
president of the American Foreign Banking Corporation. 

After serving as a Governor of the Federal Reserve Board from 1914-1918, 
Paul Warburg did not request another term. However, he was not ready to 
sever his connection with the Federal Reserve System which he had done so 
much to set up and put into operation. J.P. Morgan obligingly gave up his 
seat on the Federal Advisory Council, and for the next ten years, Paul 
Warburg continued to represent the Federal Reserve district of New York on 
the Council. He was vice president of the council 1922-25, and president 
1926-27. Thus Warburg remained the dominant presence at Federal Reserve 
Board meetings throughout the 1920s, when the European central banks 
were planning the great contraction of credit which precipitated the Crash of 
1929 and the Great Depression. 

43 



Although most of the Federal Advisory Council's "advice" to the Board of 
Governors has never been reported, on rare instances a few glimpses into its 
deliberations were afforded by brief items in The New York Times. On 
November 21, 1916, The Times reported that the Federal Advisory Council 
had met in Washington for its quarterly conference. 

"There was talk about absorbing Europe's extension of credit to South 
America and other countries. Federal Reserve officials said that to maintain 
a position as one of the world's bankers the United States must expect to be 
called upon to render a good deal of the service performed largely by 
England in the past, in extending short term credits necessary in the 
production and transportation of goods of all kinds in the world's trade, and 
that acceptances in foreign trade require lower discounts and the freest and 
most reliable gold markets." (The First World War was at its zenith in 1916.) 

In addition to his service on the Board of Governors and the Federal 
Advisory Council, Paul Warburg continued to address bankers' groups 
about the monetary policies they were expected to follow. On October 22, 
1915, he addressed the Twin City Bankers Club, St. Paul, Minnesota during 
which speech he stated, 

"It is to your interest to see the Federal Reserve banks as strong as they 
possibly can be. It staggers the imagination to think what the future may 
have in store for the development of American banking. With Europe's 
foremost powers limited to their own field, with the United States turned into 
a creditor nation for all the world, the boundaries of the field that lies open 
for us are determined only by our power of safe expansion. The scope of our 
banking future will ultimately be limited by the amount of gold that we can 
muster as the foundation of our banking and credit structure." 

The composition of the Federal Reserve Board of Governors and the Federal 
Reserve Advisory Council, from its initial membership to the present day, 
shows links to the Jekyll Island conference and the London banking 
community which offers incontrovertible evidence, acceptable in any court of 
law, that there was a plan to gain control of the money and credit of the 
people of the United States, and to use it for the profit of the architects. Old 
Jekyll Island hands were Frank Vanderlip, president of the National City 
Bank, which bought a large portion of the shares of the Federal Reserve 
Bank of New York in 1914; Paul Warburg of Kuhn, Loeb Company; Henry 
P. Davison, J.P. Morgan's righthand man, and director of the First National 
Bank of New York and the National Bank of Commerce, which took a large 
portion of Federal Reserve Bank of New York stock; and Benjamin Strong, 
also known as a Morgan lieutenant, 



44 



who served as Governor of the Federal Reserve Bank of New York during 
the 1920's.* 

The selection of the regional members of the Federal Advisory Council from 
the list of bankers who worked most closely with the "big five" banks of New 
York, and who were their principal correspondent banks, proves that the 
much-touted "regional safeguarding of the public interest" by Carter Glass 
and other Washington proponents of the Federal Reserve Act was from its 
very inception a deliberate deception. The fact that for seventy years this 
council was able to meet with the Federal Reserve Board of Governors and to 
"advise" the Governors on decisions of monetary policy which affected the 
daily lives of every person in the United States, without the public being 
aware of their existence, demonstrates that the planners of the central bank 
operation knew exactly how to achieve their objectives through 
"administrative processes" of which the public would remain ignorant. The 
claim that the "advice" of the council members is not binding on the 
Governors or that it carries no weight is to claim that four times a year, 
twelve of the most influential bankers in the United States take time from 
their work to travel to Washington to meet with the Federal Reserve Board 
merely to drink coffee and exchange pleasantries. It is a claim which anyone 
familiar with the workings of the business community will find impossible to 
take seriously. In 1914, it was a four-day trip each way for bankers from the 
Far West to come to Washington for a council meeting with the Federal 
Reserve Board. These men had extensive business interests which demanded 
their time. J.P. Morgan was a director of sixty-three corporations which held 
annual meetings, and authority, and no one of the lesser officials, even if they 
wished, would dare to cross swords with them." 



* "The Federal Advisory Council has great influence with the Federal 
Reserve Board. Conspicuously upon that council is J.P. Morgan, the leading 
member of J.P. Morgan Company and son of the late J.P. Morgan. Every one 
of the twelve members of the Advisory Council, as you well know, was 
educated in the same atmosphere. The Federal Reserve Act is not only a 
special privilege act but privileged persons have been placed in control and 
are its advisors in its administration. The Federal Reserve Board and the 
Federal Advisory Council administer the Federal Reserve System as its head 

(FROM: "Why Is Your Country At War?" by Charles Lindbergh, published 
in 1917). The above paragraph explains why Woodrow Wilson ordered 
government agents to seize and destroy the printing plates and copies of this 
book in the spring of 1918. 

45 



could hardly be expected to travel to Washington to attend meetings of the 
Federal Reserve Board if his advice was to be considered of no importance.** 



** The J.P. Morgan connection has remained predominant on the Federal 
Advisory Council. For the past several years, the prestigious Federal Reserve 
District No. 2, the New York District, has been represented on the Federal 
Advisory Council by Lewis Preston. Preston is Chairman of J.P. Morgan 
Company and also Chairman and Chief Executive Officer of Morgan 
Guaranty Trust, New York. An heir to the Baldwin fortune (a company 
controlled by Morgan), Preston married the heiress to the Pulitzer 
newspaper fortune. On February 26, 1929, The New York Times noted that a 
merger had been effected between National Bank of Commerce and 
Guaranty Trust, making them the largest bank in the United States, with a 
capital of two billion dollars. The merger was negotiated by Myron C. 
Taylor, president of U.S. Steel, a Morgan firm. The banks occupied adjoining 
buildings on Wall Street, and, as The New York Times noted, "The 
Guaranty Trust Company long has been known as one of 'the Morgan 
group' of banks." The National Bank of Commerce has also been identified 
with Morgan interests. 



46 



CHAPTER FIVE 

The House of Rothschild 



The success of the Federal Reserve Conspiracy will raise many questions in 
the minds of readers who are unfamiliar with the history of the United States 
and finance capital. How could the Kuhn, Loeb-Morgan alliance, powerful 
though it might be, believe that it would be capable, first, of devising a plan 
which would bring the entire money and credit of the people of the United 
States into their hands, and second, of getting such a plan enacted into law? 

The capability of devising and enacting the "National Reserve Plan", as the 
immediate result of the Jekyll Island expedition was called, was easily within 
the powers of the Kuhn, Loeb-Morgan alliance, according to the following 
from McClure's Magazine, August 1911, "The Seven Men" by John Moody: 

" Seven men in Wall Street now control a great share of the fundamental 
industry and resources of the United States. Three of the seven men, J.P. 
Morgan, James J. Hill, and George F. Baker, head of the First National Bank 
of New York belong to the so-called Morgan group; four of them, John D. 
and William Rockefeller, James Stillman, head of the National City Bank, 
and Jacob H. Schiff of the private banking firm of Kuhn, Loeb Company, to 
the so-called Standard Oil City Bank group... the central machine of capital 
extends its control over the United States... The process is not only 
economically logical; it is now practically automatic. "32 

Thus we see that the 1910 plot to seize control of the money and credit of the 
people of the United States was planned by men who already controlled most 
of the country's resources. It seemed to John Moody "practically automatic" 
that they should continue with their operations. 

What John Moody did not know, or did not tell his readers, was that the 
most powerful men in the United States were themselves answerable to 
another power, a foreign power, and a power which had been steadfastly 
seeking to extend its control over the young republic of the United States 
since its very inception. This power was the financial power of England, 
centered in the London Branch of the House of Rothschild. The fact was that 
in 1910, the United States was for all practical purposes being ruled 



32 John Moody, "The Seven Men", McClure's Magazine, August, 1911, p. 
418 

47 



from England, and so it is today. The ten largest bank holding companies in 
the United States are firmly in the hands of certain banking houses, all of 
which have branches in London. They are J.P. Morgan Company, Brown 
Brothers Harriman, Warburg, Kuhn Loeb and J. Henry Schroder. All of 
them maintain close relationships with the House of Rothschild, principally 
through the Rothschild control of international money markets through its 
manipulation of the price of gold. Each day, the world price of gold is set in 
the London office of N.M. Rothschild and Company. 

Although these firms are ostensibly American firms, which merely maintain 
branches in London, the fact is that these banking houses actually take their 
direction from London. Their history is a fascinating one, and unknown to 
the American public, originating as it did in the international traffic in gold, 
slaves, diamonds, and other contraband. There are no moral considerations 
in any business decision made by these firms. They are interested solely in 
money and power. 

Tourists today gape at the magnificent mansions of the very rich in Newport, 
Rhode Island, without realizing that not only do these "cottages" stand as a 
memorial to the baronial desires of our Victorian millionaires, but that their 
erection in Newport represented a nostalgic memorialization of the great 
American fortunes, which had their beginnings in Newport when it was the 
capital of the slave trade. 

The slave trade for centuries had its headquarters in Venice, until 
Seventeenth Century Britain, the new master of the seas, used its control of 
the oceans to gain a monopoly. As the American colonies were settled, its 
fiercely independent people, most of whom did not want slaves, found to 
their surprise that slaves were being sent to our ports in great numbers. 

For many years, Newport was the capital of this unsavory trade. William 
Ellery, the Collector of the Port of Newport, said in 1791: 

"...an Ethiopian eld as soon change his skin as a Newport merchant eld be induced 
to change so lucrative a trade.... for the slow profits of any manufactory." 

John Quincy Adams remarked in his Diary, page 459, "Newport's former 
prosperity was chiefly owing to its extensive employment in the African slave 
trade." 

The pre-eminence of J.P. Morgan and the Brown firm in American finance can be 
dated to the development of Baltimore as the nineteenth century capital of the slave 
trade. Both of these firms originated in Baltimore, opened branches in London, 
came under the aegis of the House of Rothschild, and returned to the United States 
to open branches in New York and to become the dominant power, not only in 
finance, but also in government. In recent years, key posts such as Secretary of 
Defense have been held by Robert Lovett, partner of Brown Brothers Harriman, 
and Thomas S. Gates, partner of Drexel and Company, a J.P. Morgan sub- 

48 



sidiary firm. The present Vice President, George Bush, is the son of Prescott 
Bush, a partner of Brown Brothers Harriman, for many years the senator 
from Connecticut, and the financial organizer of Columbia Broadcasting 
System of which he also was a director for many years. 

To understand why these firms operate as they do, it is necessary to give a 
brief history of their origins. Few Americans know that J.P. Morgan 
Company began as George Peabody and Company. George Peabody (1795- 
1869), born at South Danvers, Massachusetts, began business in Georgetown, 
D.C. in 1814 as Peabody, Riggs and Company, dealing in wholesale dry 
goods, and in operating the Georgetown Slave Market. In 1815, to be closer 
to their source of supply, they moved to Baltimore, where they operated as 
Peabody and Riggs, from 1815 to 1835. Peabody found himself increasingly 
involved with business originating from London, and in 1835, he established 
the firm of George Peabody and Company in London. He had excellent 
entree in London business through another Baltimore firm established in 
Liverpool, the Brown Brothers. Alexander Brown came to Baltimore in 1801, 
and established what is now known as the oldest banking house in the United 
States, still operating as Brown Brothers Harriman of New York; Brown, 
Shipley and Company of England; and Alex Brown and Son of Baltimore. 
The behind the scenes power wielded by this firm is indicated by the fact that 
Sir Montagu Norman, Governor of the Bank of England for many years, was 
a partner of Brown, Shipley and Company.* Considered the single most 
influential banker in the world, Sir Montagu Norman was organizer of 
"informal talks" between heads of central banks in 1927, which led directly 
to the Great Stockmarket Crash of 1929. 

Soon after he arrived in London, George Peabody was surprised to be 
summoned to an audience with the gruff Baron Nathan Mayer Rothschild. 
Without mincing words, Rothschild revealed to Peabody, that much of the 
London aristocracy openly disliked Rothschild and refused his invitations. 
He proposed that Peabody, a man of modest means, be established as a lavish 
host whose entertainments would soon be the talk of London. Rothschild 
would, of course, pay all the bills. Peabody accepted the offer, and soon 
became known as the most popular host in London. His annual Fourth of 
July dinner, celebrating American Independence, became extremely popular 
with the English aristocracy, many of whom, while drinking Peabody' s wine, 
regaled each other with jokes about Rothschild's crudities and bad manners, 
without realizing that every drop they drank had been paid for by 
Rothschild. 



* "There is an informal understanding that a director of Brown, Shipley 
should be on the Board of the Bank of England, and Norman was elected to it 
in 1907." Montagu Norman, Current Biography, 1940. 

49 



It is hardly surprising that the most popular host in London would also 
become a very successful businessman, particularly with the House of 
Rothschild supporting him behind the scenes. Peabody often operated with a 
capital of 500,000 pounds on hand, and became very astute in his buying and 
selling on both sides of the Atlantic. His American agent was the Boston firm 
of Beebe, Morgan and Company, headed by Junius S. Morgan, father of 
John Pierpont Morgan. Peabody, who never married, had no one to succeed 
him, and he was very favorably impressed by the tall, handsome Junius 
Morgan. He persuaded Morgan to join him in London as a partner in 
George Peabody and Company in 1854. In 1860, John Pierpont Morgan had 
been taken on as an apprentice by the firm of Duncan, Sherman in New 
York. He was not very attentive to business, and in 1864, Morgan's father 
was outraged when Duncan, Sherman refused to make his son a partner. He 
promptly extended an arrangement whereby one of the chief employees of 
Duncan, Sherman, Charles H. Dabney, was persuaded to join John Pierpont 
Morgan in a new firm, Dabney, Morgan and Company. Bankers Magazine, 
December, 1864, noted that Peabody had withdrawn his account from 
Duncan, Sherman, and that other firms were expected to do so. The Peabody 
account, of course, went to Dabney, Morgan Company. 

John Pierpont Morgan was born in 1837, during the first money panic in the 
United States. Significantly, it had been caused by the House of Rothschild, 
with whom Morgan was later to become associated. 

In 1836, President Andrew Jackson, infuriated by the tactics of the bankers 
who were attempting to persuade him to renew the charter of the Second 
Bank of the United States, said, "You are a den of vipers. I intend to rout you 
out and by the Eternal God I will rout you out. If the people only understood 
the rank injustice of our money and banking system, there would be a 
revolution before morning. " 

Although Nicholas Biddle was President of the Bank of the United States, it 
was well known that Baron James de Rothschild of Paris was the principal 
investor in this central bank. Although Jackson had vetoed the renewal of the 
charter of the Bank of the United States, he probably was unaware that a few 
months earlier, in 1835, the House of Rothschild had cemented a relationship 
with the United States Government by superseding the firm of Baring as 
financial agent of the Department of State on January 1, 1835. 

Henry Clews, the famous banker, in his book, Twenty-eight Years in Wall 
Street33, states that the Panic of 1837 was engineered because the charter of 
the Second Bank of the United States had run out in 1836. Not only did 
President Jackson promptly withdraw government funds 



33 Henry Clews, Twenty-eight Years in Wall Street, Irving Company, New York, 1888, page 157 

50 



from the Second Bank of the United States, but he deposited these funds, $10 
million, in state banks. The immediate result, Clews tells us, is that the 
country began to enjoy great prosperity. This sudden flow of cash caused an 
immediate expansion of the national economy, and the government paid off 
the entire national debt, leaving a surplus of $50 million in the Treasury. 

The European financiers had the answer to this situation. Clews further 
states, "The Panic of 1837 was aggravated by the Bank of England when it in 
one day threw out all the paper connected with the United States." 

The Bank of England, of course, was synonymous with the name of Baron 
Nathan Mayer Rothschild. Why did the Bank of England in one day "throw 
out" all paper connected with the United States, that is, refuse to accept or 
discount any securities, bonds or other financial paper based in the United 
States? The purpose of this action was to create an immediate financial panic 
in the United States, cause a complete contraction of credit, halt further 
issues of stocks and bonds, and ruin those seeking to turn United States 
securities into cash. In this atmosphere of financial panic, John Pierpont 
Morgan came into the world. His grandmother, Joseph Morgan, was a well 
to do farmer who owned 106 acres in Hartford, Connecticut. He later opened 
the City Hotel, and the Exchange Coffee Shop, and in 1819, was one of the 
founders of the Aetna Insurance Company. 

George Peabody found that he had chosen well in selecting Junius S. Morgan 
as his successor. Morgan agreed to continue the sub rosa relationship with 
N.M. Rothschild Company, and soon expanded the firm's activities by 
shipping large quantities of railroad iron to the United States. It was 
Peabody iron which was the foundation for much of American railroad 
tracks from 1860 to 1890. In 1864, content to retire and leave his firm in the 
hands of Morgan, Peabody allowed the name to be changed to Junius S. 
Morgan Company. The Morgan firm then and since has always been 
directed from London. John Pierpont Morgan spent much of his time at his 
magnificent London mansion, Prince's Gate. 

One of the high water marks of the successful Rothschild-Peabody Morgan 
business venture was the Panic of 1857. It had been twenty years since the 
Panic of 1837: its lessons had been forgotten by hordes of eager investors 
who were anxious to invest the profits of a developing America. It was time 
to fleece them again. The stock market operates like a wave washing up on 
the beach. It sweeps with it many minuscule creatures who derive all of their 
life support from the oxygen and water of the wave. They coast along at the 
crest of the "Tide of Prosperity". Suddenly the wave, having reached the 
high water mark on the beach, recedes, leaving all of the creatures gasping 
on the sand. Another wave may come in time to 

51 



save them, but in all likelihood it will not come as far, and some of the sea 
creatures are doomed. In the same manner, waves of prosperity, fed by 
newly created money, through an artificial contraction of credit, recedes, 
leaving those it had borne high to gasp and die without hope of salvation. 

Corsair, the Life of J.P. Morgan,34 tells us that the Panic of 1857 was caused 
by the collapse of the grain market and by the sudden collapse of Ohio Life 
and Trust, for a loss of five million dollars. With this collapse nine hundred 
other American companies failed. Significantly, one not only survived, but 
prospered from the crash. In Corsair, we learn that the Bank of England lent 
George Peabody and Company five million pounds during the panic of 1857. 
Winkler, in Morgan the Magnificent35 says that the Bank of England 
advanced Peabody one million pounds, an enormous sum at that time, and 
the equivalent of one hundred million dollars today, to save the firm. 
However, no other firm received such beneficence during this Panic. The 
reason is revealed by Matthew Josephson, in The Robber Barons. He says on 
page 60: 

"For such qualities of conservatism and purity, George Peabody and 
Company, the old tree out of which the House of Morgan grew, was famous. 
In the panic of 1857, when depreciated securities had been thrown on the 
market by distressed investors in America, Peabody and the elder Morgan, 
being in possession of cash, had purchased such bonds as possessed real value 
freely, and then resold them at a large advance when sanity was 
restored. "36 

Thus, from a number of biographies of Morgan, the story can be pieced together. 
After the panic had been engineered, one firm came into the market with one 
million pounds in cash, purchased securities from distressed investors at panic 
prices, and later resold them at an enormous profit. That firm was the Morgan firm, 
and behind it was the clever maneuvering of Baron Nathan Mayer Rothschild. The 
association remained secret from the most knowledgeable financial minds in 
London and New York, although Morgan occasionally appeared as the financial 
agent in a Rothschild operation. As the Morgan firm grew rapidly during the late 
nineteenth century, until it dominated the finances of the nation, many observers 
were puzzled that the Rothschilds seemed so little interested in profiting by 
investing in the rapidly advancing American economy. John Moody notes, in The 
Masters of Capital, page 27, "The Rothschilds were content to remain a close ally of 
Morgan... as far as the American field was concerned.'37 Secrecy was more 
profitable than valor. 



34 Corsair, The Life of Morgan 

35 John K. Winkler, Morgan the Magnificent, Vanguard, N.Y. 1930 

36 Matthew Josephson, The Robber Barons, Harcourt Brace, N.Y. 1934 

37 John Moody, The Masters of Capital 

52 



The reason that the European Rothschilds preferred to operate anonymously 
in the United States behind the facade of J.P. Morgan and Company is 
explained by George Wheeler, in Pierpont Morgan and Friends, the 
Anatomy of a Myth, page 17: 

"But there were steps being taken even now to bring him out of the financial 
backwaters — and they were not being taken by Pierpont Morgan himself. 
The first suggestion of his name for a role in the recharging of the reserve 
originated with the London branch of the House of Rothschild, Belmont's 
employers. "38 

Wheeler goes on to explain that a considerable anti-Rothschild movement 
had developed in Europe and the United States which focused on the banking 
activities of the Rothschild family. Even though they had a registered agent 
in the United States, August Schoenberg, who had changed his name to 
Belmont when he came to the United States as the representative of the 
Rothschilds in 1837, it was extremely advantageous to them to have an 
American representative who was not known as a Rothschild agent. 

Although the London house of Junius S. Morgan and Company continued to 
be the dominant branch of the Morgan enterprises, with the death of the 
senior Morgan in 1890 in a carriage accident on the Riviera, John Pierpont 
Morgan became the head of the firm. After operating as the American 
representative of the London firm from 1864-1871 as Dabney Morgan 
Company, Morgan took on a new partner in 1871, Anthony Drexel of 
Philadelphia and operated as Drexel Morgan and Company until 1895. 
Drexel died in that year, and Morgan changed the name of the American 
branch to J.P. Morgan and Company. 

LaRouche39 tells us that on February 5, 1891, a secret association known as 
the Round Table Group was formed in London by Cecil Rhodes, his banker, 
Lord Rothschild, the Rothschild in-law, Lord Rosebery, and Lord Curzon. 
He states that in the United States the Round Table was represented by the 
Morgan group. Dr. Carrol Quigley refers to this group as "The British- 
American Secret Society" in Tragedy and Hope, stating that "The chief 
backbone of this organization grew up along the already existing financial 
cooperation running from the Morgan Bank in New York to a group of 
international financiers in London led by Lazard Brothers (in 1901). "40 

William Guy Carr, in Pawns In The Game states that, "In 1899, J.P. Morgan 
and Drexel went to England to attend the International Bankers 



38 George Wheeler, Pierpont Morgan and Friends, the Anatomy of a Myth, Prentice Hall, N.J. 1973 

39 Lyndon H. LaRouche, Jr., Dope, Inc., The New Benjamin Franklin House Publishing Company, N.Y. 1978 

40 Dr. Carrol Quigley, Tragedy and Hope, Macmillan Co., N.Y. 

53 



Convention. When they returned, J.P. Morgan had been appointed head 
representative of the Rothschild interests in the United States. As the result of the 
London Conference, J.P. Morgan and Company of New York, Drexel and Company 
of Philadelphia, Grenfell and Company of London, and Morgan Harjes Cie of Paris, 
M.M. Warburg Company of Germany and America, and the House of Rothschild 
were all affiliated. "41 

Apparently unaware of the Peabody connection with the Rothschilds and the fact 
that the Morgans had always been affiliated with the House of Rothschild, Carr 
supposed that he had uncovered this relationship as of 1899, when in fact it went 
back to 1835.* 

After World War I, the Round Table became known as the Council on Foreign 
Relations in the United States, and the Royal Institute of International Affairs in 
London. The leading government officials of both England and the United States 
were chosen from its members. In the 1960s, as growing attention centered on the 
surreptitious governmental activities of the Council on Foreign Relations, subsidiary 
groups, known as the Trilateral Commission and the Bilderbergers, representing 
the identical financial interests, began operations, with the more important officials, 
such as Robert Roosa, being members of all three groups. 



41 William Guy Carr, Pawns In The Game, privately printed, 1956, pg. 60 

* July 30, 1930 McFadden Basis of Control of Economic Conditions. This control of the world business 
structure and of human happiness and progress by a small group is a matter of the most intense public 
interest. In analyzing it, we must begin with the internal group which centers itself around J.P. Morgan 
Company. Never before had there been such a powerful centralized control over finance, industrial 
production, credit and wages as is at this time vested in the Morgan group... The Morgan control of the 
Federal Reserve System is exercised through control of the management of the Federal Reserve Bank 
of New York. 

George F. Peabody History of the Great American Fortunes, Gustavus Myers, Mod. Lib. 537, notes 
that J.P. Morgan's father, Junius S. Morgan, had become a partner of George Peabody in the banking 
business. "When the Civil War came on, George Peabody and Company were appointed the financial 
representatives in England of the U.S. Government.... with this appointment their wealth suddenly 
began to pile up; where hitherto they had amassed the riches by stages not remarkably rapid, they now 
added many millions within a very few years." According to writers of the day, the methods of George 
Peabody & Company were not only unreasonable but double treason, in that, while in the act of giving 
inside aid to the enemy, George Peabody & Company were the potentiaries of the U.S. Government 
and were being well paid to advance its interests. "Springfield Republic", 1866: "For all who know 
anything on the subject know very well that Peabody and his partners gave us no faith and no help in 
our struggle for national existence. They participated to the fullest in the common English distrust of 
our cause and our success, and talked and acted for the South rather than for our nation. No 
individuals contributed so much to flooding our money markets and weakening financial confidence in 
our nationality than George Peabody & Company, and none made more money by the operation. All 
the money that Mr. Peabody is giving away so lavishly among our institutions of learning was gained 
by the speculations of his house in our misfortunes." Also, New York Times, Oct. 31, 1866: 
Reconstruction Carpetbaggers Money Fund. Lightning over the Treasury Building, John Elson, 
Meador Publishing Co., Boston 41, pg. 53, "The Bank of England with its subsidiary banks in America 
(under the domination of J.P. Morgan) the Bank of France, and the Reichsbank of Germany, 
composed an interlocking and cooperative banking system, the main objective of which was the 
exploitation of the people." 

54 



According to William Guy Carr, in Pawns In The Game,42 the initial 
meeting of these ex officio planners took place in Mayer Amschel Bauer's 
Goldsmith Shop in Frankfurt in 1773. Bauer, who adopted the name of 
"Rothschild" or Red Shield, from the red shield which he hung over his door 
to advertise his business (the red shield today is the official coat of arms of 
the City of Frankfurt), (See Cover) "was only thirty years of age when he 
invited twelve other wealthy and influential men to meet him in Frankfurt. 
His purpose was to convince them that if they agreed to pool their resources 
they could then finance and control the World Revolutionary Movement and 
use it as their Manual of Action to win ultimate control of the wealth, natural 
resources, and manpower of the entire world. This agreement reached, 
Mayer unfolded his revolutionary plan. The project would be backed by all 
the power that could be purchased with their pooled resources. By clever 
manipulation of their combined wealth it would be possible to create such 
adverse economic conditions that the masses would be reduced to a state 
bordering on starvation by unemployment... Their paid propagandists would 
arouse feelings of hatred and revenge against the ruling classes by exposing 
all real and alleged cases of extravagance, licentious conduct, injustice, 
oppression, and persecution. They would also invent infamies to bring into 
disrepute others who might, if left alone, interfere with their overall plans... 
Rothschild turned to a manuscript and proceeded to read a carefully 
prepared plan of action. 1. He argued that LAW was FORCE only in 
disguise. He reasoned it was logical to conclude 'By the laws of nature right 
lies in force.' 2. Political freedom is an idea, not a fact. In order to usurp 
political power all that was necessary was to preach 'Liberalism' so that the 
electorate, for the sake of an idea, would yield some of their power and 
prerogatives which the plotters could then gather into their own hands. 3. 
The speaker asserted that the Power of Gold had usurped the power of 
Liberal rulers.... He pointed out that it was immaterial to the success of his 
plan whether the established governments were destroyed by external or 
internal foes because the victor had to of necessity ask the aid of 'Capital' 
which 'Is entirely in our hands'. 4. He argued that the use of any and all 
means to reach their final goal was justified on the grounds that the ruler 
who governed by the moral code was not a skilled politician because he left 
himself vulnerable and in an unstable position. 5. He asserted that 'Our right 
lies in force. The word RIGHT is an abstract thought and proves nothing. I 
find a new RIGHT... to attack by the Right of the Strong, to reconstruct all 
existing institutions, and to become the sovereign Lord of all those who left to 
us the Rights to their powers by laying them down to us in their liberalism. 6. 
The power of our resources must remain invisible until the very moment 
when it has gained such 



42 William Guy Carr, Pawns In The Game, privately printed, 1956 

55 



strength that no cunning or force can undermine it. He went on to outline twenty- 
five points. Number 8 dealt with the use of alcoholic liquors, drugs, moral 
corruption, and all vice to systematically corrupt youth of all nations. 9. They had 
the right to seize property by any means, and without hesitation, if by doing so they 
secured submission and sovereignty. 10. We were the first to put the slogans 
Liberty, Equality, and Fraternity into the mouths of the masses, which set up a new 
aristocracy. The qualification for this aristocracy is WEALTH which is dependent 
on us. 11. Wars should be directed so that the nations engaged on both sides should 
be further in our debt. 12. Candidates for public office should be servile and 
obedient to our commands, so that they may readily be used. 13. Propaganda— their 
combined wealth would control all outlets of public information. 14. Panics and 
financial depressions would ultimately result in World Government, a new order of 
one world government." 

The Rothschild family has played a crucial role in international finance for two 
centuries, as Frederick Morton, in The Rothschilds writes: 

"For the last one hundred and fifty years the history of the House of Rothschild has 
been to an amazing extent the backstage history of Western Europe. "38 (Preface)... 
Because of their success in making loans not to individuals, but to nations, they 
reaped huge profits, although as Morton writes, p. 36, "Someone once said that the 
wealth of Rothschild consists of the bankruptcy of nations. "43 

E.C. Knuth writes, in The Empire of the City, "The fact that the House of 
Rothschild made its money in the great crashes of history and the great wars of 
history, the very periods when others lost their money, is beyond question. "44 

The Great Soviet Encyclopaedia, states, "The clearest example of a personal linkup 
(international directorates) on a Western European scale is the Rothschild family. 
The London and Paris branches of the Rothschilds are bound not just by family ties 
but also by personal link-ups in jointly controlled companies. "45 The encyclopaedia 
further described these companies as international monopolies. 

The sire of the family, Mayer Amschel Rothschild, established a small business as a 
coin dealer in Frankfurt in 1743. Although previously known as Bauer*, he 
advertised his profession by putting up a sign depicting an eagle on a red shield, an 
adaptation of the coat of arms of the City of Frankfurt, to which he added five 
golden arrows extending from the talons, signifying his five sons. Because of this 
sign, he took the 



43 Frederick Morton, The Rothschilds, Fawcett Publishing Company, N.Y., 1961 

44 E.C. Knuth, Empire of the City, p. 71 

45 Great Soviet Encyclopaedia, Edition 3, 1973, Macmillan, London, Vol. 14, pg. 691 

* "The original name of Rothschild was Bauer." p. 397, Henry Clews, Twenty-eight years in 
Wall Street. 

56 



name 'Rothschild" or "Red Shield". When the Elector of Hesse earned a fortune by 
renting Hessian mercenaries to the British to put down the rebellion in the 
American colonies, Rothschild was entrusted with this money to invest. He made an 
excellent profit both for himself and the Elector, and attracted other accounts. In 
1785 he moved to a larger house, 148 Judengasse, a five story house known as "The 
Green Shield" which he shared with the Schiff family. 

The five sons established branches in the principal cities of Europe, the most 
successful being James in Paris and Nathan Mayer in London. Ignatius Balla in The 
Romance of the Rothschilds46 tells us how the London Rothschild established his 
fortune. He went to Waterloo, where the fate of Europe hung in the balance, saw 
that Napoleon was losing the battle, and rushed back to Brussels. At Ostend, he 
tried to hire a boat to England, but because of a raging storm, no one was willing to 
go out. Rothschild offered 500 francs, then 700, and finally 1,000 francs for a boat. 
One sailor said, " I will take you for 2000 francs; then at least my widow will have 
something if we are drowned." Despite the storm, they crossed the Channel. 

The next morning, Rothschild was at his usual post in the London Exchange. 
Everyone noticed how pale and exhausted he looked. Suddenly, he started selling, 
dumping large quantities of securities. Panic immediately swept the Exchange. 
Rothschild is selling; he knows we have lost the Battle of Waterloo. Rothschild and 
all of his known agents continued to throw securities onto the market. Balla says, 
"Nothing could arrest the disaster. At the same time he was quietly buying up all 
securities by means of secret agents whom no one knew. In a single day, he had 
gained nearly a million sterling, giving rise to the saying, 'The Allies won the Battle 
of Waterloo, but it was really Rothschild who won.'"* 

In "The Profits of War", Richard Lewinsohn says, "Rothschild's war profits from 
the Napoleonic Wars financed their later stock speculations. Under Metternich, 
Austria after long hesitation, finally agreed to accept financial direction from the 
House of Rothschild. "47 



46 Ignatius Balla, The Romance of the Rothschilds, Everleigh Nash, London, 1913 

* The New York Times, April 1, 1915 reported that in 1914, Baron Nathan Mayer 
de Rothschild went to court to suppress Ignatius Balla's book on the grounds that 
the Waterloo story about his grandfather was untrue and libelous. The court ruled 
that the story was true, dismissed Rothschild's suit, and ordered him to pay all 
costs. The New York Times noted in this story that "The total Rothschild wealth has 
been estimated at $2 billion." A previous story in The New York Times (May 27, 
1905) noted that Baron Alphonse de Rothschild, head of the French house of 
Rothschild, possessed $60 million in American securities in his fortune, although the 
Rothschilds reputedly were not active in the American field. This explains why their 
agent, J.P. Morgan, had only $19 million in securities in his estate when he died in 
1913, and securities handled by Morgan were actually owned by his employer, 
Rothschild." 

47 Richard Lewinsohn, The Profits of War, E.P. Dutton, 1937 

57 



After the success of his Waterloo exploit, Nathan Mayer Rothschild gained 
control of the Bank of England through his near monopoly of "Consols" and 
other shares. Several "central" banks, or banks which had the power to issue 
currency, had been started in Europe: The Bank of Sweden, in 1656, which 
began to issue notes in 1661, the earliest being the Bank of Amsterdam, 
which financed Oliver Cromwell's seizure of power in England in 1649, 
ostensibly because of religious differences. Cromwell died in 1657 and the 
throne of England was re-established when Charles II was crowned in 1660. 
He died in 1685. In 1689, the same group of bankers regained power in 
England by putting King William of Orange on the throne. He soon repaid 
his backers by ordering the British Treasury to borrow 1,250,000 pounds 
from these bankers. He also issued them a Royal Charter for the Bank of 
England, which permitted them to consolidate the National debt (which had 
just been created by this loan) and to secure payments of interest and 
principal by direct taxation of the people. The Charter forbade private 
goldsmiths to store gold and to issue receipts, which gave the stockholders of 
the Bank of England a money monopoly. The goldsmiths also were required 
to store their gold in the Bank of England vaults. Not only had their privilege 
of issuing circulating medium been taken away by government decree, but 
their fortunes were now turned over to those who had supplanted them.* 

In his "Cantos", 46; 27, Ezra Pound refers to the unique privileges which 
William Paterson advertised in his prospectus for the Charter of the Bank of 
England: 

"Said Paterson Hath benefit of interest on all the moneys which it, the bank, 
creates out of nothing." 

The "nothing" which is referred to, of course, is the bookkeeping operation 
of the bank, which "creates" money by entering a notation that it has "lent" 
you one thousand dollars, money which did not exist until the bank made the 
entry. 

By 1698, the British Treasury owed 16 million pounds sterling to the Bank of 
England. By 1815, principally due to the compounding of interest, the debt 
had risen to 885 million pounds sterling. Some of this increase was due to the 
wars which had flourished during that period, including the Napoleonic 
Wars and the wars which England had fought to retain its American Colony. 



* NOTE: In the United States, after the stockholders of the Federal Reserve 
System had consolidated their power in 1934, our government also issued 
orders that private citizens could not store or hold gold. 



58 



William Paterson (1658-1719) himself benefited little from "the moneys 
which the bank creates out of nothing", as he withdrew, after a policy 
disagreement, from the Bank of England a year after it was founded. A later 
William Paterson became one of the framers of the United States 
Constitution, while the name lingers on, like the pernicious central bank 
itself. 

Paterson had found himself unable to work with the Bank of England's 
stockholders. Many of them remained anonymous, but an early description 
of the Bank of England stated it was "A society of about 1330 persons, 
including the King and Queen of England, who had 10,000 pounds of stock, 
the Duke of Leeds, Duke of Devonshire, Earl of Pembroke, and the Earl of 
Bradford." 

Because of his success in his speculations, Baron Nathan Mayer de 
Rothschild, as he now called himself, reigned as the supreme financial power 
in London. He arrogantly exclaimed, during a party in his mansion, "I care 
not what puppet is placed upon the throne of England to rule the Empire on 
which the sun never sets. The man that controls Britain's money supply 
controls the British Empire, and I control the British money supply." 

His brother James in Paris had also achieved dominance in French finance. 
In Baron Edmond de Rothschild, David Druck writes, "(James) Rothschild's 
wealth had reached the 600 million mark. Only one man in France possessed 
more. That was the King, whose wealth was 800 million. The aggregate 
wealth of all the bankers in France was 150 million less than that of James 
Rothschild. This naturally gave him untold powers, even to the extent of 
unseating governments whenever he chose to do so. It is well known, for 
example, that he overthrew the Cabinet of Prime Minister Thiers. "48 

The expansion of Germany under Bismarck was accompanied by his 
dependence on Samuel Bleichroder, Court Bankers of the Prussian Emperor, 
who had been known as an agent of the Rothschilds since 1828. The later 
Chancellor of Germany, Dr. von Bethmann Hollweg, was the son of Moritz 
Bethmann of Frankfurt, who had intermarried with the Rothschilds. 
Emperor Wilhelm I also relied heavily on Bischoffsheim, Goldschmidt, and 
Sir Ernest Cassel of Frankfurt, who emigrated to England and became 
personal banker to the Prince of Wales, later Edward VII. Cassel's daughter 
married Lord Mountbatten, giving the family a direct relationship to the 
present British Crown. 



48 David Druck, Baron Edmond de Rothschild, (Privately printed), N.Y. 1850 

49 E.M. Josephson, The Strange Death of Franklin D. Roosevelt, pg. 39, Chedney 
Press, N.Y. 1948 

59 



Josephson49 states that Philip Mountbatten was related through the Cassels to the 
Meyer Rothschilds of Frankfurt. Thus, the English royal House of Windsor has a 
direct family relationship to the Rothschilds. In 1901, when Queen Victoria's son, 
Edward, became King Edward VII, he re-established the Rothschild ties. 

Paul Emden in Behind The Throne says, 

"Edward's preparation for his metier was quite different from that of his 
mother, hence he 'ruled' less than she did. Gratefully, he retained around 
him men who had been with him in the age of the building of the Baghdad 
Railway...there were added to the advisory staff Leopold and Alfred de 
Rothschild, various members of the Sassoon family, and above all his private 
financial advisor Sir Ernest Cassel."50 

The enormous fortune which Cassel made in a relatively short time gave him 
an immense power which he never misused. He amalgamated the firm of 
Vickers Sons with the Naval Construction Company and the Maxim- 
Nordenfeldt Guns and Ammunition Company, a fusion from which there 
arose the worldwide firm of Vickers Sons and Maxim. On an entirely 
different capacity from Cassel were businessmen like the Rothschilds. The 
firm was run on democratic principles, and the various partners all had to 
be members of the family. With great hospitality and in a princely manner 
they led the lives of grand seigneurs, and it was natural that Edward VII 
should find them congenial. Thanks to their international family 
relationships and still more extended business connections, they knew the 
whole world, were well informed about everybody, and had reliable 
knowledge of matters which did not appear on the surface. This combination 
of finance and politics had been a trademark of the Rothschilds from the 
very beginning. The House of Rothschild always knew more than could be 
found in the papers and even more than could be read in the reports which 
arrived at the Foreign Office. In other countries also the relations of the 
Rothschilds extended behind the throne. Not until numerous diplomatic 
publications appeared in the years after the war did a wider public learn 
how strongly Alfred de Rothschild's hand affected the politics of Central 
Europe during the twenty years before the war (World War I)." 

With the control of the money came the control of the news media. Kent Cooper, 
head of the Associated Press, writes in his autobiography, Barriers Down, 

"International bankers under the House of Rothschild acquired an interest 
in the three leading European agencies."51 

Thus the Rothschilds bought control of Reuters International News Agency, based 
in London, Havas of France, and Wolf in Germany, which controlled the 
dissemination of all news in Europe. 



50 Paul Emden, Behind The Throne, Hoddard Stoughton, London, 1934 

51 Kent Cooper, Barriers Down, pg. 21 

60 



In Inside Europe52, John Gunther wrote in 1936 that any French prime 
minister, at the end of 1935, was a creature of the financial oligarchy, and 
that this financial oligarchy was dominated by twelve regents, of whom six 
were bankers, and were headed by Baron Edmond de Rothschild. 

The iron grip of the "London Connection" on the media was exposed in a 
recent book by Ben J. Bagdikian The Media Monopoly, described as "A 
startling report on the 50 corporations that control what America sees, hears, 
reads". 53 Bagdikian, who edited the nation's most influential magazine the 
Saturday Evening Post until the monopoly suddenly closed it down, reveals 
the interlocking directorates among the fifty corporations which control the 
news, but fails to trace them back to the five London banking houses which 
control them. He mentions that CBS interlocks with the Washington Post, 
Allied Chemical, Wells Fargo Bank, and others, but does not tell the reader 
that Brown Brothers Harriman controls CBS, or that the Eugene Meyer 
family (Lazard Freres) controls Allied Chemical and the Washington Post, 
and Kuhn Loeb Co. the Wells Fargo Bank. He shows the New York Times 
interlocked with Morgan Guaranty Trust, American Express, First Boston 
Corporation and others, but does not show how the banking interlocks. He 
does not mention the Federal Reserve System in his entire book, which is 
conspicuous by its absence. 

Bagdikian documents that the media monopoly is steadily closing down more 
newspapers and magazines. Washington D.C., with one paper, The Post, is 
unique among world capitols. London has eleven daily newspapers, Paris 
fourteen, Rome eighteen, Tokyo seventeen, and Moscow nine. He cites a 
study from the 1982 World Press Encyclopaedia that the United States is at 
the bottom of industrial nations in the number of daily newspapers sold per 
1,000 population. Sweden leads the list with 572, the United States is at the 
bottom with 287. There is universal distrust of the media by Americans, 
because of their notorious monopoly and bias. The media unanimously urge 
higher taxes on working people, more government spending, a welfare state 
with totalitarian powers, close relations with Russia, and a rabid 
denunciation of anyone who opposes Communism. This is the program of 
"the London Connection." It flaunts a maniacal racism, and has as its motto 
the dictum of its high priestess, Susan Sontag, that "The white race is the 
cancer of history." Everyone should be against cancer. The media monopoly 
deals with its opponents in one of two ways; either frontal assault of libel 
which the average person cannot afford to litigate, or an iron curtain of 
silence, the standard treatment for any work which exposes its clandestine 
activities. 



52 John Gunther, Inside Europe, 1936 

53 Ben H. Bagdikian, The Media Monopoly, Beacon Press, Boston 1983 

61 



Although the Rothschild plan does not match any single political or economic 
movement since it was enunciated in 1773, vital parts of it can be discerned 
in all political revolution since that date. LaRouche54 points out that the 
Round Tables sponsored Fabian Socialism in England, while backing the 
Nazi regime through a Round Table member in Germany, Dr. Hjalmar 
Schacht, and that they used the Nazi Government throughout World War II 
through Round Table member Admiral Canaris, while Allen Dulles ran a 
collaborating intelligence operation in Switzerland for the Allies. 



54 Lyndon H. LaRouche, Jr., Dope, Inc., New Benjamin Franklin House 
Publishing Co., New York, 1978 



62 



CHAPTER SIX 

The London Connection 



"So you see, my dear Coningsby, that the world is governed by very different 
personages from what is imagined by those who are not behind the 
scenes. "55— Disraeli, Prime Minister of England during Queen Victoria's 
reign. 

In 1775, the colonists of America declared their independence from Great 
Britain, and subsequently won their freedom by the American Revolution. 
Although they achieved political freedom, financial independence proved to 
be a more difficult matter. In 1791, Alexander Hamilton, at the behest of 
European bankers, formed the first Bank of the United States, a central bank 
with much the same powers as the Bank of England. The foreign influences 
behind this bank, more than a century later, were able to get the Federal 
Reserve Act through Congress, giving them at last the central bank of issue 
for our economy. Although the Federal Reserve Bank was neither Federal, 
being owned by private stockholders, nor a Reserve, because it was intended 
to create money, instead of to hold it in reserve, it did achieve enormous 
financial power, so much so that it has gradually superseded the popular 
elected government of the United States. Through the Federal Reserve 
System, American independence was stealthily but invincibly absorbed back 
into the British sphere of influence. Thus the London Connection became the 
arbiter of policy of the United States. 

Because of England's loss of her colonial empire after the Second World 
War, it seemed that her influence as a world political power was waning. 
Essentially, this was true. The England of 1980 is not the England of 1880. 
She no longer rules the waves; she is a second rate, perhaps third rate, 
military power, but paradoxically, as her political and military power waned, 
her financial power grew. In Capital City we find, "On almost any measure 
you care to take, London is the world's leading financial centre ... In the 
1960s London dominance increased . . ."56 

A partial explanation of this fact is given: 

"Daniel Davison, head of London's Morgan Grenfell, said, 'The American 
banks have brought the necessary money, customers, capital 



55 Coningsby, by Disraeli, Longmans Co., London, 1881, p. 252 

56 McRae and Cairncross, Capital City, Eyre Methuen, London, 1963, p. 1 

63 



and skills which have established London in its present preeminence 

only the American banks have a lender of last resort. The Federal Reserve 
Board of the United States can, and does, create dollars when necessary. 
Without the Americans, the big dollar deals cannot be put together. 

Without them, London would not be credible as an international financial 
centre.'" 57 

Thus London is the world's financial center, because it can command 
enormous sums of capital, created at its command by the Federal Reserve 
Board of the United States. But how is this possible? We have already 
established that the monetary policies of the United States, the interest rates, 
the volume and value of money, and sales of bonds, are decided, not by the 
figurehead of the Federal Reserve Board of Governors, but by the Federal 
Reserve Bank of New York. The pretended decentralization of the Federal 
Reserve System and its twelve, equally autonomous "regional" banks, is and 
has been a deception since the Federal Reserve Act became law in 1913. That 
United States monetary policy stems solely from the Federal Reserve Bank of 
New York is yet another fallacy. That the Federal Reserve Bank of New York 
is itself autonomous, and free to set monetary policy for the entire United 
States without any outside interference is especially untrue. 

We might believe in this autonomy if we did not know that the majority stock 
of the Federal Reserve Bank of New York was purchased by three New York 
City banks: First National Bank, National City Bank, and the National Bank 
of Commerce. An examination of the principal stockholders in these banks, 
in 1914, and today, reveals a direct London connection. 

In 1812, the National City Bank began business as the City Bank, in the same 
room in which the defunct Bank of the United States, whose charter had 
expired, had been doing business. It represented many of the same 
stockholders, who were now functioning under a legitimate American 
charter. During the early 1800s, the most famous name associated with City 
Bank was Moses Taylor (1806-1882). Taylor's father had been a confidential 
agent employed in buying property for the Astor interests while concealing 
the fact that Astor was the purchaser. Through this tactic, Astor succeeded in 
buying many farms, and also a great deal of potentially valuable real estate 
in Manhattan. Although Astor' s capital was reputed to come from his fur 
trading, a number of sources indicate that he also represented foreign 
interests. LaRouche58 states that Astor, in exchange for providing 
intelligence to the British during the years before and after the 
Revolutionary War, and for inciting Indians to attack 



57 Ibid, p. 225 

58 Lyndon H. LaRouche, Dope, Inc., New Benjamin Franklin House Publishing Co., N.Y. 1978 

64 



and kill American settlers along the frontier, received a handsome reward. 
He was not paid cash, but was given a percentage of the British opium trade 
with China. It was the income from this lucrative concession which provided 
the basis for the Astor fortune. 

With his father's connection with the Astors, young Moses Taylor had no 
difficulty in finding a place as apprentice in a banking house at the age of 15. 
Like so many others in these pages, he found his greatest opportunities when 
many other Americans were going bankrupt during an abrupt contraction of 
credit. During the Panic of 1837, when more than half the business firms in 
New York failed, he doubled his fortune. In 1855, he became president of 
City Bank. During the Panic of 1857, the City Bank profited by the failure of 
many of its competitors. Like George Peabody and Junius Morgan, Taylor 
seemed to have an ample supply of cash for buying up distressed stocks. He 
purchased nearly all the stock of Delaware Lackawanna Railroad for $5 a 
share. Seven years later, it was selling for $240 a share. Moses Taylor was 
now worth fifty million dollars. 

In August, 1861, Taylor was named Chairman of the Loan Committee to 
finance the Union Government in the Civil War. The Committee shocked 
Lincoln by offering the government $5,000,000 at 12% to finance the war. 
Lincoln refused and financed the war by issuing the famous "Greenbacks" 
through the U.S. Treasury, which were backed by gold. Taylor continued to 
increase his fortune throughout the war, and in his later years, the youthful 
James Stillman became his protege. In 1882, when Moses Taylor died, he left 
seventy million dollars.* His son-in-law, Percy Pyne, succeeded him as 
president of City Bank, which had now become National City Bank. Pyne 
was paralyzed, and was barely able to function at the bank. For nine years, 
the bank stagnated, nearly all its capital being the estate of Moses Taylor. 
William Rockefeller, brother of John D. Rockefeller, had bought into the 
bank, and was anxious to see it progress. He persuaded Pyne to step aside in 
1891 in favor of James Stillman, and soon the National City Bank became the 
principal repository of the Rockefeller oil income. William Rockefeller's son, 
William, married Elsie, James Stillman' s daughter, Isabel. Like so many 
others in New York banking, James Stillman also had a British connection. 
His father, Don Carlos Stillman, had come to Brownsville, Texas, as a British 
agent and blockade runner during the Civil War. Through his banking 
connections in New York, Don Carlos had been able to find a place for 



* The New York Times noted on May 24, 1882 that Moses Taylor was 
chairman of the Loan Committee of the Associated Banks of New York City 
in 1861. Two hundred million dollars worth of securities were entrusted to 
him. It is probably due to him more than any other one man that the 
government in 1861 found itself with the means to prosecute the war. 

65 



his son as apprentice in a banking house. In 1914, when National City Bank 
purchased almost ten per cent of the shares of the newly organized Federal 
Reserve Bank of New York, two of Moses Taylor's grandsons, Moses Taylor 
Pyne and Percy Pyne, owned 15,000 shares of National City stock. Moses 
Taylor's son, H.A.C. Taylor, owned 7699 shares of National City Bank. The 
bank's attorney, John W. Sterling, of the firm of Shearman and Sterling, also 
owned 6000 shares of National City Bank. However, James Stillman owned 
47,498 shares, or almost twenty percent of the bank's total shares of 250,000. 
[See Chart I] 

The second largest purchaser of Federal Reserve Bank of New York shares 
in 1914, First National Bank, was generally known as "the Morgan Bank", 
because of the Morgan representation on the board, although the bank's 
founder George F. Baker held 20,000 shares, and his son G.F. Baker, Jr., had 
5,000 shares for twenty-five percent of the bank's total stock of 100,000 
shares. George F. Baker Sr.'s daughter married George F. St. George of 
London. The St. Georges later settled in the United States, where their 
daughter, Katherine St. George, became a prominent Congresswoman for a 
number of years. Dr. E.M. Josephson wrote of her, "Mrs. St. George, a first 
cousin of FDR and New Dealer, said, 'Democracy is a failure'." George 
Baker, Jr.'s daughter, Edith Brevoort Baker, married Jacob Schiff's 
grandson, John M. Schiff, in 1934. John M. Schiff is now honorary chairman 
of Lehman Brothers Kuhn Loeb Company. 

The third large purchase of Federal Reserve Bank of New York stock in 1914 
was the National Bank of Commerce which issued 250,000 shares. J.P. 
Morgan, through his controlling interest in Equitable Life, which held 24,700 
shares and Mutual Life, which held 17,294 shares of National Bank of 
Commerce, also held another 10,000 shares of National Bank of Commerce 
through J.P. Morgan and Company (7800 shares), J.P. Morgan, Jr. (1100 
shares), and Morgan partner H.P. Davison (1100 shares). Paul Warburg, a 
Governor of the Federal Reserve Board of Governors, also held 3000 shares 
of National Bank of Commerce. His partner, Jacob Schiff had 1,000 shares of 
National Bank of Commerce. This bank was clearly controlled by Morgan, 
who was really a subsidiary of Junius S. Morgan Company in London and 
the N.M. Rothschild Company of London, and Kuhn, Loeb Company, which 
was also known as a principal agent of the Rothschilds. 

The financier Thomas Fortune Ryan also held 5100 shares of National Bank 
of Commerce stock in 1914. His son, John Barry Ryan, married Otto Kahn's 
daughter, Kahn was a partner of Warburg and Schiff in Kuhn, Loeb 
Company, Ryan's granddaughter, Virginia Fortune Ryan, 



59 E.M. Josephson, The Strange Death of Franklin D. Roosevelt, Chedney 
Press, N.Y. 1948 

66 



married Lord Airlie, the present head of J. Henry Schroder Banking Corporation in 
London and New York. 

Another director of National Bank of Commerce in 1914, A.D. Juillard, was 
president of A.D. Juillard Company, a trustee of New York Life, and Guaranty 
Trust, all of which were controlled by J.P. Morgan. Juillard also had a British 
connection, being a director of the North British and Mercantile Insurance 
Company. Juillard owned 2000 shares of National Bank of Commerce stock, and 
was also a director of Chemical Bank. 

In The Robber Barons, by Matthew Josephson, Josephson tells us that Morgan 
dominated New York Life, Equitable Life and Mutual Life by 1900, which had one 
billion dollars in assets, and which had fifty million dollars a year to invest. He says, 

"In this campaign of secret alliances he (Morgan) acquired direct control of the 
National Bank of Commerce; then a part ownership in the First National Bank, 
allying himself to the very strong and conservative financier, George F. Baker, who 
headed it; then by means of stock ownership and interlocking directorates he linked 
to the first named banks other leading banks, the Hanover, the Liberty, and 
Chase. "60 

Mary W. Harriman, widow of E.H. Harriman, also owned 5,000 shares of National 
Bank of Commerce, in 1914. E.H. Harriman's railroad empire had been entirely 
financed by Jacob Schiff of Kuhn, Loeb Company. Levi P. Morton, also owned 1500 
shares of National Bank of Commerce stock in 1914. He had been the twenty-second 
vice-president of the United States, was an ex-Minister from the U.S. to France, and 
president of L.P. Morton Company, New York, Morton-Rose and Company and 
Morton Chaplin of London. He was a director of Equitable Life Insurance 
Company, Home Insurance Company, Guaranty Trust, and Newport Trust. 

The astounding idea that the Federal Reserve System of the United States is actually 
operated from London will probably be rejected at first hearing by most Americans. 
However, Minsky has become famous for his theory of the "dominant frame". He 
states that in any particular situation, there is a "dominant frame" to which 
everything in that situation is related and through which it can be interpreted. The 
"dominant frame" in the monetary policy decisions of the Federal Reserve System is 
that these decisions are made by those who stand to benefit most from them. At first 
glance, this would seem to be the principal stockholders of the Federal Reserve 
Bank of New York. However, we have seen that these stockholders all have a 
"London Connection". The "London Connection" becomes more obvious as the 
dominant power when we find in The 



60 Matthew Josephson, The Robber Barons, p. 409 



67 



Capital City 61 that only seventeen firms are allowed to operate as merchant 
bankers in the City of London, England's financial district. All of them must be 
approved by the Bank of England. In fact, most of the Governors of the Bank of 
England come from the partners of these seventeen firms. Clarke ranks the 
seventeen in order of their capitalization. Number 2 is the Schroder Bank. 
Number 6 is Morgan Grenfell, the London branch of the House of Morgan 
and actually its dominant branch. Lazard Brothers is Number 8. N.M. 
Rothschild is Number 9. Brown Shipley Company, the London branch of 
Brown Brothers Harriman, is Number 14. These five merchant banking 
firms of London actually control the New York banks which own the 
controlling interest in the Federal Reserve Bank of New York. 

The control over Federal Reserve System decisions is also founded in another 
unique situation. Each day, representatives of four other London banking 
firms meet in the offices of N.M. Rothschild Company in London to fix the 
price of gold for that day. The other four bankers are from Samuel Montagu 
Company, which ranks Number 5 on the list of seventeen London merchant 
banking firms, Sharps Pixley, Johnson Matheson, and Mocatta and 
Goldsmid. Despite the huge tide of paper pyramided currency and notes 
which are now flooding the world, at some point, every credit extension must 
return to be based, in however minuscule a fashion, on some deposit of gold 
in some bank somewhere in the world. Because of this factor, the London 
merchant bankers, with their power to set the price of gold each day, become 
the final arbiters of the volume of money and the price of money in those 
countries which must bow to their power. Not the least of these is the United 
States. No official of the Federal Reserve Bank of New York, or of the 
Federal Reserve Board of Governors, can command the power over the 
money of the world which is held by these London merchant bankers. Great 
Britain, while waning in political and military power, today exercises the 
greatest financial power. It is for this reason that London is the present 
financial center of the world. 



61 McRae and Cairncross, Capital City, Eyre Methuen, London, 1963 



68 



CHAPTER SEVEN 

The Hitler Connection 



J. Henry Schroder Banking Company is listed as Number 2 in capitalization 
in Capital City62 on the list of the seventeen merchant bankers who make up 
the exclusive Accepting Houses Committee in London. Although it is almost 
unknown in the United States, it has played a large part in our history. Like 
the others on this list, it had first to be approved by the Bank of England. 
And, like the Warburg family, the von Schroders began their banking 
operations in Hamburg, Germany. At the turn of the century, in 1900, Baron 
Bruno von Schroder established the London branch of the firm. He was soon 
joined by Frank Cyril Tiarks, in 1902. Tiarks married Emma Franziska of 
Hamburg, and was a director of the Bank of England from 1912 to 1945. 

During World War I, J. Henry Schroder Banking Company played an 
important role behind the scenes. No historian has a reasonable explanation 
of how World War I started. Archduke Ferdinand was assassinated at 
Sarajevo by Gavril Princeps, Austria demanded an apology from Serbia, and 
Serbia sent the note of apology. Despite this, Austria declared war, and soon 
the other nations of Europe joined the fray. Once the war had gotten started, 
it was found that it wasn't easy to keep it going. The principal problem was 
that Germany was desperately short of food and coal, and without Germany, 
the war could not go on. John Hamill in The Strange Career of Mr. 
Hoover63 explains how the problem was solved.* He quotes from 
Nordeutsche Allgemeine Zeitung, March 4, 1915, "Justice, however, 
demands that publicity should be given to the preeminent part taken by the 
German authorities in Belgium in the solution of this problem. The initiative 
came from them and it was only due to their continuous relations with the 
American Relief Committee that the provisioning question was solved." 
Hamill points out "That is what the Belgian Relief Committee was organized 
for—to keep Germany in food." 

The Belgian Relief Commission was organized by Emile Francqui, director 
of a large Belgian bank, Societe Generate, and a London mining 



62 McRae and Cairncross, Capital City, Eyre Methuen, London, 1963 

63 John Hamill, The Strange Career of Mr. Hoover, William Faro, New York, 1931 

* Copies of Hamill's book were systematically located and destroyed by government 
agents, because it was published on the eve of President Hoover's re-election 
campaign. 

69 



promoter, an American named Herbert Hoover, who had been associated 
with Francqui in a number of scandals which had become celebrated court 
cases, notably the Kaiping Coal Company scandal in China, said to have set 
off the Boxer Rebellion, which had as its goal the expulsion of all foreign 
businessmen from China. Hoover had been barred from dealing on the 
London Stock Exchange because of one judgement against him, and his 
associate, Stanley Rowe, had been sent to prison for ten years. With this 
background, Hoover was called an ideal choice for a career in humanitarian 
work. 

Although his name is unknown in the United States, Emile Francqui was the 
guiding spirit behind Herbert Hoover's rise to fortune. Hamill (on page 156) 
identifies Francqui as the director of many atrocities committed against 
natives in the Congo. "For every cartridge they spent, they had to bring in a 
man's hand". Francqui' s frightful record may have been the source for the 
charge later leveled against German soldiers in Belgium, that they chopped 
off the hands of women and children, a claim which proved to be groundless. 
Hamill also says that Francqui "tricked the Americans out of the Hankow- 
Canton railroad concession in China in 1901, and at the same time had 
'stood by' in case Hoover needed any further help in the 'taking' of the 
Kaiping coal mines. This is the humanitarian who had sole charge of the 
distribution of the Belgian 'relief during the World War, for which Hoover 
did the buying and shipping. Francqui was a director with Hoover, in the 
Chinese Engineering and Mining Company (the Kaiping mines), through 
which Hoover transported 200,000 Chinese slave workers to the Congo to 
work Francqui' s copper mines." 

Hamill says on page 311 that "Francqui opened the offices of the Belgian 
Relief in his bank, Societe Generale, as a one-man show, with a letter of 
permission from the German Governor General von der Goltz dated October 
16, 1914. 

The New York Herald Tribune of February 18, 1930, quoted by 
Congressman Louis McFadden in the House on February 26, 1930, said, 
"One of Belgium's two directors on the Bank for International Settlements 
will be Emile Francqui of the Societe Generale, a member of both the Young 
and Dawes Plan Committees. The board of directors of the international 
bank will have no more colorful character than Emile Francqui, former 
Minister of Finance, veteran of the Congo and China ... he is rated as the 
richest man in Belgium, and among the twelve richest men in Europe." 

Despite his prominence, The New York Times Index mentions Francqui only 
a few times during two decades before his death. On October 3, 1931, The 
New York Times quoted Le Peuple of Brussels that Francqui would visit the 
United States. "As a friend of President Hoover, Monsieur Francqui will not 
fail to pay a visit to the President. " 

70 



On October 30, 1931, The New York Times reported this visit with the 
headline, "Hoover-Francqui Talk was Unofficial". "It was stated that Mr. 
Francqui spent Tuesday night as a personal guest of the President, and that 
they talked of world financial problems in general, strictly unofficial. Mr. 
Francqui was an associate of President Hoover during the latters 
ministrations in Belgium during the war. Their visit had no official 
significance. Mr. Francqui is a private citizen and not engaged in any official 
mission." 

No reference is made to the Hoover-Francqui business associations which 
were the subject of huge lawsuits in London. The Francqui visit probably 
involved Hoover's Moratorium on German War Debts, which stunned the 
financial world. On December 15, 1931, Chairman McFadden informed the 
House of a dispatch in the Public Ledger of Philadelphia, October 24, 1931, 
"GERMAN REVEALS HOOVER'S SECRET. The American President was 
in intimate negotiations with the German government regarding a year's 
debt holiday as early as December, 1930." McFadden continued, "Behind the 
Hoover announcement there were many months of hurried and furtive 
preparations both in Germany and in Wall Street offices of German bankers. 
Germany, like a sponge, had to be saturated with American money. Mr. 
Hoover himself had to be elected, because this scheme began before he 
became President. If the German international bankers of Wall Street—that 
is Kuhn Loeb Company, J. & W. Seligman, Paul Warburg, J. Henry 
Schroder—and their satellites had not had this job waiting to be done, 
Herbert Hoover would never have been elected President of the United 
States. The election of Mr. Hoover to the Presidency was through the 
influence of the Warburg Brothers, directors of the great bank of Kuhn Loeb 
Company, who carried the cost of his election. In exchange for this 
collaboration Mr. Hoover promised to impose the moratorium of German 
debts. Hoover sought to exempt Kreuger's loan to Germany of $125 million 
from the operation of the Hoover Moratorium. The nature of Kreuger's 
swindle was known here in January when he visited his friend, Mr. Hoover, 
in the White House." 

Not only did Hoover entertain Francqui in the White House, but also Ivar 
Kreuger, the most famous swindler of the twentieth century. 

When Francqui died on November 13, 1935, The New York Times memorialized 
him as "the copper king of the Congo . . . Mr. Francqui, last year having gained 
dictatorial powers over the belga, maintained it on the gold standard during a crisis. 
In 1891 he led an expedition into the Congo and gained it for King Leopold. A man 
of great wealth, rated among the twelve richest men in Europe, he secured 
enormous copper deposits. He was Minister of State in 1926 and Minister of Finance 
in 1934. It was his pride that he never accepted a centime of remuneration for his 
services to the government. While consul general at Shanghai, he secured valuable 
concessions, notably the Kaiping coal mines and the 

71 



railway concession for the Tientsin Railroad. He was governor of the Societe 
Generale de Belgique, Lloyd Royal Beige, and regent of La Banque Nationale 
de Belgique. " 

The Times does not mention Francqui's business partnerships with Hoover. 
Like Francqui, Hoover also refused remuneration for "government service", 
and as Secretary of Commerce and as President of the United States, he 
turned his salary back to the government. 

On December 13, 1932, Chairman McFadden introduced a resolution of 
impeachment against President Hoover for high crimes and misdemeanors, 
which covers many pages, including violation of contracts, unlawful 
dissipation of the financial resources of the United States, and his 
appointment of Eugene Meyer to the Federal Reserve Board. The resolution 
was tabled and never acted upon by the House. 

In criticizing Hoover's Moratorium of German War Debts, McFadden had 
referred to Hoover's "German" backers. Although all of the principals of 
"the London Connection" did originate in Germany, most of them in 
Frankfurt, at the time they sponsored Hoover's candidacy for the Presidency 
of the United States, they were operating from London, as Hoover himself 
had done for most of his career. 

Also, the Hoover Moratorium was not intended to "help" Germany, as 
Hoover had never been "pro-German". The Moratorium on Germany's war 
debts was necessary so that Germany would have funds for rearming. In 
1931, the truly forward-looking diplomats were anticipating the Second 
World War, and there could be no war without an "aggressor". 

Hoover had also carried out a number of mining promotions in various parts of the 
world as a secret agent for the Rothschilds, and had been rewarded with a 
directorship in one of the principal Rothschild enterprises, the Rio Tinto Mines in 
Spain and Bolivia. Francqui and Hoover threw themselves into the seemingly 
impossible task of provisioning Germany during the First World War. Their success 
was noted in Nordeutsche Allgemeine Zeitung, March 13, 1915, which noted that 
large quantities of food were now arriving from Belgium by rail. Schmoller's 
Yearbook for Legislation, Administration and Political Economy for 1916, shows 
that one billion pounds of meat, one and a half billion pounds of potatoes, one and a 
half billion pounds of bread, and one hundred twenty-one millions pounds of butter 
had been shipped from Belgium to Germany in that year. A patriotic British woman 
who had operated a small hospital in Belgium for several years, Edith Cavell, wrote 
to the Nursing Mirror in London, April 15, 1915, complaining that the "Belgian 
Relief" supplies were being shipped to Germany to feed the German army. The 
Germans considered Miss Cavell to be of no importance, and paid no attention to 
her, but the British Intelligence Service in London was appalled by Miss Cavell's 
discovery, and demanded that the Germans arrest her as a spy. 

72 



Sir William Wiseman, head of British Intelligence, and partner of Kuhn 
Loeb Company, feared that the continuance of the war was at stake, and 
secretly notified the Germans that Miss Cavell must be executed. The 
Germans reluctantly arrested her and charged her with aiding prisoners of 
war to escape. The usual penalty for this offense was three months 
imprisonment, but the Germans bowed to Sir William Wiseman's demands, 
and shot Edith Cavell, thus creating one of the principal martyrs of the First 
World War. 

With Edith Cavell out of the way, the "Belgian Relief" operation continued, 
although in 1916, German emissaries again approached London officials 
with the information that they did not believe Germany could continue 
military operations, not only because of food shortages, but because of 
financial problems. More "emergency relief" was sent, and Germany 
continued in the war until November, 1918. Two of Hoover's principal 
assistants were a former lumber shipping clerk from the West Coast, 
Prentiss Gray, and Julius H. Barnes, a grain salesman from Duluth. Both 
men became partners in J. Henry Schroder Banking Corporation in New 
York after the war, and amassed large fortunes, principally in grain and 
sugar. 

With the entry of the United States into the war, Barnes and Gray were given 
important posts in the newly created U.S. Food Administration, which also 
was placed under Herbert Hoover's direction. Barnes became President of 
the Grain Corporation of the U.S. Food Administration from 1917 to 1918, 
and Gray was chief of Marine Transportation. Another J. Henry Schroder 
partner, G. A. Zabriskie, was named head of the U.S. Sugar Equalization 
Board. Thus the London Connection controlled all food in the United States 
through its grain and sugar "Czars" during the First World War. Despite 
many complaints of corruption and scandal in the U.S. Food Administration, 
no one was ever indicted. After the war, the partners of J. Henry Schroder 
Company found that they now owned most of Cuba's sugar industry. One 
partner, M.E. Rionda, was president of Cuba Cane Corporation, and 
director of Manati Sugar Company, American British and Continental 
Corporation, and other firms. Baron Bruno von Schroder, senior partner of 
the firm, was a director of North British and Mercantile Insurance 
Company. His father, Baron Rudolph von Schroder of Hamburg, was a 
director of Sao Paulo Coffee Ltd., one of the largest Brazilian coffee 
companies, with F.C. Tiarks, also of the Schroder firm.* 



* The New York Times noted on October 11, 1923: "Frank C. Tiarks, 
Governor of the Bank of England, will spend two weeks here to set up the 
opening of the banking house branch of J. Henry Schroder of London." 

73 



After the war, Zabriskie, who had been sugar Czar of the United States by 
presiding over the U.S. Sugar Equalization Board, became the president of 
several of the largest baking corporations in the United States: Empire 
Biscuit, Southern Baking Corporation, Columbia Baking, and other firms. 

As his principal assistant in the U.S. Food Administration, Hoover chose 
Lewis Lichtenstein Strauss, who was soon to become a partner in Kuhn Loeb 
Company, marrying the daughter of Jerome Hanauer of Kuhn Loeb. 
Throughout his distinguished humanitarian service with the Belgian Relief 
Commission, the U.S. Food Administration, and, after the war, the American 
Relief Administration, Hoover's closest associate was one Edgar Rickard, 
born in Pontgibaud, France. In Who's Who, he states that he was "World 
War administrative assistant to Herbert Hoover in all war and post-war 
organizations including the Commission For Relief in Belgium. He also 
served on the U.S. Food Administration from 1914-1924." He remained one 
of Hoover's closest friends, and usually the Rickards and Hoovers took their 
vacations together. After Hoover became Secretary of Commerce under 
Coolidge, Hamill tells us that Hoover awarded his friend the Hazeltine Radio 
patents, which paid him one million dollars a year in royalties. 

In 1928, "the London Connection" decided to run Herbert Hoover for 
president of the United States. There was only one problem; although 
Herbert Hoover had been born in the United States, and was thus eligible for 
the office of the presidency, according to the Constitution, he had never had 
a business address or a home address in the United States, as he had gone 
abroad just after completing college at Stanford. The result was that during 
his campaign for the presidency, Herbert Hoover listed as his American 
address Suite 2000, 42 Broadway, New York, which was the office of Edgar 
Rickard. Suite 2000 was also shared by the grain tycoon and partner of J. 
Henry Schroder Banking Corporation, Julius H. Barnes. 

After Herbert Hoover was elected president of the United States, he insisted 
on appointing one of the old London crowd, Eugene Meyer, as Governor of 
the Federal Reserve Board. Meyer's father had been one of the partners of 
Lazard Freres of Paris, and Lazard Brothers of London. Meyer, with 
Baruch, had been one of the most powerful men in the United States during 
World War I, a member of the famous Triumvirate which exercised 
unequalled power; Meyer as Chairman of the War Finance Corporation, 
Bernard Baruch as Chairman of the War Industries Board, and Paul 
Warburg as Governor of the Federal Reserve System. 

A longtime critic of Eugene Meyer, Chairman Louis McFadden of the House 
Banking and Currency Committee, was quoted in The New York Times, 
December 17, 1930, as having made a speech on the floor of the House 
attacking Hoover's appointment of Meyer, and charging that "He 

74 



represents the Rothschild interest and is liaison officer between the French 
Government and J.P. Morgan." On December 18, The Times reported that 
"Herbert Hoover is deeply concerned" and that McFadden's speech was "an 
unfortunate occurrence." On December 20, The Times commented on the 
editorial page, under the headline, "McFadden Again", "The speech ought to 
insure the Senate ratification of Mr. Meyer as head of the Federal Reserve. 
The speech was incoherent, as Mr. McFadden's speeches usually are." As 
The Times predicted, Meyer was duly approved by the Senate. 

Not content with having a friend in the White House, J. Henry Schroder 
Corporation was soon embarked on further international adventures, 
nothing less than a plan to set up World War II. This was to be done by 
providing, at a crucial juncture, the financing for Adolf Hitler's assumption 
of power in Germany. Although any number of magnates have been given 
credit for the financing of Hitler, including Fritz Thyssen, Henry Ford, and 
J.P. Morgan, they, as well as others, did provide millions of dollars for his 
political campaigns during the 1920s, just as they did for others who also had 
a chance of winning, but who disappeared and were never heard from again. 
In December of 1932, it seemed inevitable to many observers of the German 
scene that Hitler was also ready for a toboggan slide into oblivion. Despite 
the fact that he had done well in national campaigns, he had spent all the 
money from his usual sources and now faced heavy debts. In his book 
Aggression, Otto Lehmann-Russbeldt tells us that "Hitler was invited to a 
meeting at the Schroder Bank in Berlin on January 4, 1933. The leading 
industrialists and bankers of Germany tided Hitler over his financial 
difficulties and enabled him to meet the enormous debt he had incurred in 
connection with the maintenance of his private army. In return, he promised 
to break the power of the trade unions. On May 2, 1933, he fulfilled his 
promise. "64 

Present at the January 4, 1933 meeting were the Dulles brothers, John Foster 
Dulles and Allen W. Dulles of the New York law firm, Sullivan and 
Cromwell, which represented the Schroder Bank. The Dulles brothers often 
turned up at important meetings. They had represented the United States at 
the Paris Peace Conference (1919); John Foster Dulles would die in harness 
as Eisenhower's Secretary of State, while Allen Dulles headed the Central 
Intelligence Agency for many years. Their apologists have seldom attempted 
to defend the Dulles brothers appearance at the meeting which installed 
Hitler as the Chancellor of Germany, preferring to pretend that it never 
happened. Obliquely, one biographer Leonard Mosley, bypasses it in Dulles 
when he states, 



64 Otto Lehmann-Russbeldt, Aggression, Hutchinson & Co., Ltd., London, 
1934, p. 44 

75 



"Both brothers had spent large amounts of time in Germany, where Sullivan and 
Cromwell had considerable interest during the early 1930's, having represented 
several provincial governments, some large industrial combines, a number of big 
American companies with interests in the Reich, and some rich individuals. "65 

Allen Dulles later became a director of J. Henry Schroder Company. Neither he nor 
J. Henry Schroder were to be suspected of being pro-Nazi or pro-Hitler; the 
inescapable fact was that if Hitler did not become Chancellor of Germany, there was 
little likelihood of getting a Second World War going, the war which would double 
their profits.* 

The Great Soviet Encyclopaedia states "The banking house Schroder Bros, (it was 
Hitler's banker) was established in 1846; its partners today are the barons von 
Schroeder, related to branches in the United States and England. "66** 

The financial editor of "The Daily Herald" of London wrote on Sept. 30, 1933 of 
"Mr. Norman's decision to give the Nazis the backing of the Bank (of England.)" 
John Hargrave, in his biography of Montagu Norman says, 

"It is quite certain that Norman did all he could to assist Hitlerism to gain and 
maintain political 

power, operating on the financial plane from his stronghold in Threadneedle 
Street." [i.e. Bank of England.— Ed.] 

Baron Wilhelm de Ropp, a journalist whose closest friend was Major F.W. 
Winterbotham, chief of Air Intelligence of the British Secret Service, brought the 
Nazi philosopher, Alfred Rosenberg, to London and introduced him to Lord 
Hailsham, Secretary for War, Geoffrey Dawson, editor of The Times, and Norman, 
Governor of the Bank of England. After talking with Norman, Rosenberg met with 
the representative of the Schroder Bank of London. The managing director of the 
Schroder Bank, F.C. Tiarks, was also a director of the Bank of England. Hargrave 
says (p. 217), "Early in 1934 a select group of City financiers gathered in Norman's 
room behind the windowless walls, Sir Robert Kindersley, partner of Lazard 
Brothers, Charles Hambro, F.C. Tiarks, Sir Josiah Stamp, (also a director of the 
Bank of England). Governor Norman spoke of the political situation in Europe. A 
new power had established itself, a great 'stabilizing 



65 Leonard Mosley, Dulles, Dial Publishing Co., New York 1978, p. 88 

* Ezra Pound, in an April 18, 1943 broadcast over Radio Rome stated, ". . .and men in 
America, not content with this war are already aiming at the next one. The time to object is 
now." 

66 The Great Soviet Encyclopaedia, Macmillan, London, 1973, v.2, p. 620 

** The New York Times noted on October 11, 1944: "Senator Claude Pepper criticized John 
Foster Dulles, Gov. Dewey's foreign relations advisor for his connection with the law firm of 
Sullivan and Cromwell and having aided Hitler financially in 1933. Pepper described the 
January 4, 1933 meeting of Franz von Papen and Hitler in Baron Schroder's home in 
Cologne, and from that time on the Nazis were able to continue their march to power." 

76 



force', namely, Nazi Germany. Norman advised his co-workers to include 
Hitler in their plans for financing Europe. There was no opposition." 

In Wall Street and the Rise of Hitler, Antony C. Sutton writes "The Nazi 
Baron Kurt von Schroeder acted as the conduit for I.T.T. money funneled to 
Heinrich Himmler's S.S. organization in 1944, while World War II was in 
progress, and the United States was at war with Germany. "67 Kurt von 
Schroeder, born in 1889, was partner in the Cologne Bankhaus, J.H. Stein & 
Co., which had been founded in 1788. After the Nazis gained power in 1933, 
Schroeder was appointed the German representative at the Bank of 
International Settlements. The Kilgore Committee in 1940 stated that 
Schroeder' s influence with the Hitler Administration was so great that he 
had Pierre Laval appointed head of the French Government during the Nazi 
Occupation. The Kilgore Committee listed more than a dozen important 
titles held by Kurt von Schroeder in the 1940's, including President of 
Deutsche Reichsbahn, Reich Board of Economic Affairs, SS Senior Group 
Leader, Council of Reich Post Office, Deutsche Reichsbank and other leading 
banks and industrial groups. Schroeder served on the board of all 
International Telephone and Telegraph subsidiaries in Germany. 

In 1938, the London Schroder Bank became the German financial agent in 
Great Britain. The New York branch of Schroder had been merged in 1936 
with the Rockefellers, as Schroder, Rockefeller, Inc. at 48 Wall Street. 
Carlton P. Fuller of Schroder was president of this firm, and Avery 
Rockefeller was vice-president. He had been a behind the scenes partner of J. 
Henry Schroder for years, and had set up the construction firm of Bechtel 
Corporation, whose employees (on leave) now play a leading role in the 
Reagan Administration, as Secretary of Defense and Secretary of State. 

Ladislas Farago, in The Game of the Foxes,68 reported that Baron William 
de Ropp, a double agent, had penetrated the highest echelons in pre- World 
War II days, and Hitler relied upon de Ropp as his confidential consultant 
about British affairs. It was de Ropp's advice which Hitler followed when he 
refused to invade England. 

Victor Perlo writes, in The Empire of High Finance: 

"The Hitler government made the London Schroder Bank their financial 
agent in Britain and America. Hitler's personal banking account was with 
J.M. Stein Bankhaus, the German subsidiary of the Schroder Bank. F.C. 
Tiarks of the British J. Henry Schroder Company 



67 Antony C. Sutton, WALL STREET AND THE RISE OF HITLER, 76 Press, Seal 
Beach, California, 1976, p. 79 

68 Ladislas Farago, The Game of the Foxes, 1973 

77 



was a member of the Anglo-German Fellowship with two other partners as 
members, and a corporate membership." 69 

The story goes much further than Perlo suspects. J. Henry Schroder WAS 
the Anglo-German Fellowship, the English equivalent of the America First 
movement, and also attracting patriots who did not wish to see their nation 
involved in a needless war with Germany. During the 1930's, until the 
outbreak of World War II, the Schroders poured money into the Anglo- 
German Fellowship, with the result that Hitler was convinced he had a large 
pro-German fifth column in England composed of many prominent 
politicians and financiers. The two divergent political groups in the 1930's in 
England were the War Party, led by Winston Churchill, who furiously 
demanded that England go to war against Germany, and the Appeasement 
Party, led by Neville Chamberlain. After Munich, Hitler believed the 
Chamberlain group to be the dominant party in England, and Churchill a 
minor rabble-rouser. Because of his own financial backers, the Schroders, 
were sponsoring the Appeasement Party, Hitler believed there would be no 
war. He did not suspect that the backers of the Appeasement Party, now that 
Chamberlain had served his purpose in duping Hitler, would cast 
Chamberlain aside and make Churchill the Prime Minister. It was not only 
Chamberlain, but also Hitler, who came away from Munich believing that it 
would be "Peace in our time." 

The success of the Schroders in duping Hitler into this belief explains several 
of the most puzzling questions of World War II. Why did Hitler allow the 
British Army to decamp from Dunkirk and return home, when he could have 
wiped them out? Against the frantic advice of his generals, who wished to 
deliver the coup de grace to the English Army, Hitler held back because he 
did not wish to alienate his supposed vast following in England. For the same 
reason, he refused to invade England during a period when he had military 
superiority, believing that it would not be necessary, as the Anglo-German 
Fellowship group was ready to make peace with him. The Rudolf Hess flight 
to England was an attempt to confirm that the Schroder group was ready to 
make peace and form a common bond against the Soviets. Rudolf Hess 
continues to languish in prison today, many years after the war, because he 
would, if released, 



69 Victor Perlo, The Empire of High Finance, International Publishers, 1957, 
p. 177 



78 



testify that he had gone to England to contact the members of the Anglo- 
German Fellowship, that is, the Schroder group, about ending the war.* 

If anyone supposes this is all ancient history, with no application to the 
present political scene, we introduce the name of John Lowery Simpson of 
Sacramento, California. Although he appears for the first time in Who's 
Who in America for 1952, Mr. Simpson states that he served under Herbert 
Hoover on the Commission for Relief in Belgium from 1915 to 1917; U.S. 
Food Administration, 1917 to 1918, American Relief Commission, 1919, and 
with P.N. Gray Company, Vienna, 1919 to 1921. Gray was the Chief of 
Maritime Transportation for the U.S. Food Administration, which enabled 
him to set up his own shipping company after the war. Like other Hoover 
humanitarians, Simpson also joined the J. Henry Schroder Banking 
Company (Adolf Hitler's personal bankers) and the J. Henry Schroder Trust 
Company. He also became a partner of Schroder-Rockefeller Company when 
that investment trust backed a construction company which became the 
world's largest, the firm of Bechtel Incorporated. Simpson was chairman of 
the finance committee of Bechtel Company, Bechtel International, and 
Canadian Bechtel. Simpson states he was consultant to the Bechtel-McCone 
interests in war production during World War II. He served on the Allied 
Control Commission in Italy 1943-44. He married Margaret Mandell, of the 
merchant family for whom Col. Edward Mandell House was named, and he 
backed a California personality, first for Governor, then for President. As a 
result, Simpson and J. Henry Schroder Company now have serving them as 
Secretary of Defense, former Bechtel employee Caspar Weinberger. As 
Secretary of State they have serving them George Pratt Schultz, also a 
Bechtel employee, who happens to be a Standard Oil heir, reaffirming the 
Schroder-Rockefeller company ties. Thus, the "conservative" Reagan 
Administration has a Secretary of Defense from Schroder Company, a 
Secretary of State from Schroder -Rockefeller, and a vice president whose 
father was senior partner of Brown Brothers Harriman. 



* The following accounts are from The New York Times: October 21, 1945, "A broadcast 
over the Luxembourg radio said tonight that Baron Kurt von Schroder, former banker who 
helped finance the rise of the Nazi party, had been recognized in an American prison camp 
and arrested." November 1, 1945, "British Army Headquarters: Baron Kurt von Schroder, 
55 year old banker and friend of Heinrich Himmler is being held in Dusseldorf pending 
decision on his indictment as a war criminal, the Military Government official 
announcement said today." February 29, 1948, "An immediate investigation was demanded 
yesterday by the Society for the Prevention of World War III as to why the German Nazi 
banker, Kurt von Schroder, was not tried as a war criminal by an allied military tribunal. 
Noting that von Schroder was sentenced last November to three months imprisonment and 
fined 1500 Reichsmarks by a German denazification court in Bielefeld, in the British Zone, 
C. Monteith Gilpin, secretary for the society said the question should be asked why von 
Schroder was allowed to escape allied justice, and why our own officials have not demanded 
that von Schroder be tried by an Allied military tribunal. 'Von Schroder is as guilty as 
Hitler or Goering.'" 

79 



The Heritage Foundation has also been an important factor in the policy- 
making of the Reagan Administration. Now we find that the Heritage 
Foundation is part of the Tavistock Institute network, directed by British 
Intelligence. The financial decisions are still made at the Bank of England, 
and who is head of the Bank of England? Sir Gordon Richardson, chairman 
of J. Henry Schroder Co. of London and New York from 1962 to 1972, when 
he became Governor of the Bank of England. The "London Connection" has 
never been more firmly in the saddle of the United States Government. 

On July 3, 1983, The New York Times announced that Gordon Richardson, 
Governor of the Bank of England for the past ten years, had been replaced 
by Robert Leigh-Pemberton, Chairman of the National Westminster Bank. 
The list of directors of National Westminster Bank reads like a Who's Who 
of the British ruling class. They include the Chairman, Lord Aldenham, who 
is also Chairman of Antony Gibbs & Son, merchant bankers, one of the 
seventeen privileged firms chartered by the Bank of England; Sir Walter 
Barrie, Chairman of the British Broadcasting System; F.E. Harmer, 
Governor of the London School of Economics, the training school for the 
international bankers, and chairman of New Zealand Shipping Company; 
Sir E.C. Mieville, private secretary to the King of England 1937-45; 
Marquess of Salisbury, Lord Cecil, Lord Privy Seal (the Cecils have been 
considered one of England's three ruling families since the Middle Ages); 
Lord Leathers, Baron of Purfleet, Minister of War Transport 1941-45, 
chairman of William Cory group of companies; Sir W.H. Coates and W.J. 
Worboys of Imperial Chemical Industries (the English DuPont); Earl of 
Dudley, chairman British Iron & Steel, Sir W. Benton Jones, chairman 
United Steel and many other steel companies; Sir G.E. Schuster, Bank of 
New Zealand; East India Coal Company; A. d'A. Willis, Ashanti Goldfields 
and many banks, tea companies and other firms; V.W. Yorke, chairman of 
Mexican Railways Ltd. 

Richardson, former chairman of Schroders with a New York subsidiary 
holding Federal Reserve Bank of New York stock, was replaced by the 
chairman of National Westminster, with a subsidiary in New York holding 
Federal Reserve Bank of New York stock. Robert Leigh Pemberton, a 
director of Equitable Life Assurance Society (J.P. Morgan), married the 
daughter of the Marchioness of Exeter, (the Cecil Burghley family). Thereby, 
the control of the London Connection remains constantly in effect. 

The list of the present directors of J. Henry Schroder Bank and Trust shows 
the continuing international influence since the First World War. George A. 
Braga is also director of Czarnikow-Rionda Company, vice-president of 
Francisco Sugar Company, president of Manati Sugar Company, and vice- 
president of New Tuinicui Sugar Company. His relative, 

80 



Rionda B. Braga, is president of Francisco Sugar Company and vice- 
president of Manati Sugar Company. The Schroder control of sugar goes 
back to the U.S. Food Administration under Herbert Hoover and Lewis L. 
Strauss of Kuhn, Loeb, Company during World War I. Schroder's attorneys 
are the firm of Sullivan and Cromwell. John Foster Dulles of this firm was 
present during the historic agreement to finance Hitler, and was later 
Secretary of State in the Eisenhower administration. Alfred Jaretzki, Jr., of 
Sullivan and Cromwell is also a director of Manati Sugar Company and 
Francisco Sugar Company. 

Another director of J. Henry Schroder is Norris Darrell, Jr., born in Berlin, 
Germany, partner of Sullivan and Cromwell, and a director of Schroder 
Trust Company. Bayless Manning, partner of the Wall Street law firm of 
Paul, Weiss, Rifkind and Wharton, is also a director of J. Henry Schroder. 
He was president of the Council on Foreign Relations from 1971-1977, and is 
editor in chief of the Yale Law Review. 

Paul H. Nitze, the prominent "disarmament negotiator" for the United States 
government, is a director of Schroder's Inc. He married Phyllis Pratt, of the 
Standard Oil fortune, whose father gave the Pratt family mansion as the 
building which houses the Council on Foreign Relations. 



81 



CHAPTER EIGHT 

World War One 

"Money is the worst of all contraband. "--William Jennings Bryan 

It is now apparent that there might have been no World War without the 
Federal Reserve System. A strange sequence of events, none of which were 
accidental, had occurred. Without Theodore Roosevelt's "Bull Moose" 
candidacy, the popular President Taft would have been reelected, and 
Woodrow Wilson would have returned to obscurity.* If Wilson had not been 
elected, we might have had no Federal Reserve Act, and World War One 
could have been avoided. The European nations had been led to maintain 
large standing armies as the policy of the central banks which dictated their 
governmental decisions. In April, 1887, the Quarterly Journal of Economics 
had pointed out: 

"A detailed revue of the public debts of Europe shows interest and sinking 
fund payments of $5,343 million annually (five and one-third billion). M. 
Neymarck's conclusion is much like Mr. Atkinson's. The finances of Europe 
are so involved that the governments may ask whether war, with all its 
terrible chances, is not preferable to the maintenance of such a precarious 
and costly peace. If the military preparations of Europe do not end in war, 
they may well end in the bankruptcy of the States. Or, if such follies lead 
neither to war nor to ruin, then they assuredly point to industrial and 
economic revolution." 

From 1887 to 1914, this precarious system of heavily armed but bankrupt 
European nations endured, while the United States continued to be a debtor 
nation, borrowing money from abroad, but making few international loans, 
because we did not have a central bank or "mobilization of credit". The 
system of national loans developed by the Rothschilds served to finance 
European struggles during the nineteenth century, because they were spread 
out over Rothschild branches in several countries. By 1900, it was obvious 
that the European countries could not afford a major war. They had large 
standing armies, universal military service, and modern weapons, but their 
economies could not support the enormous expenditures. The Federal 
Reserve System began operations in 



*NOTE: P.34. "House revealed to me in a confidential moment, 'Wilson was 
elected by Teddy Roosevelt.' " The Strangest Friendship in History, 
Woodrow Wilson and Col. House, George Sylvester Viereck, Liveright, N.Y. 
1932 

82 



1914, forcing the American people to lend the Allies twenty-five billion 
dollars which was not repaid, although considerable interest was paid to New 
York bankers. The American people were driven to make war on the 
German people, with whom we had no conceivable political or economic 
quarrel. Moreover, the United States comprised the largest nation in the 
world composed of Germans; almost half of its citizens were of German 
descent, and by a narrow margin, German had been voted down as the 
national language.* The German Ambassador to Turkey, baron Wangeheim 
asked the American Ambassador to Turkey, Henry Morgenthau, why the 
United States intended to make war in Germany. "We Americans," replied 
Morgenthau, speaking for the group of Harlem real estate operators of which 
he was the head, "are going to war for a moral principle." J.P. Morgan 
received the proceeds of the First Liberty Loan to pay off $400,000,000 which 
he advanced to Great Britain at the outset of the war. To cover this loan, 
$68,000,000 in notes had been issued under the provisions of the Aldrich- 
Vreeland Act for issuing notes against securities, the only time this provision 
was employed. The notes were retired as soon as the Federal Reserve Banks 
began operation, and replaced by Federal Reserve Notes. 

During 1915 and 1916, Wilson kept faith with the bankers who had 
purchased the White House for him, by continuing to make loans to the 
Allies. His Secretary of State, William Jennings Bryan, protested constantly, 
stating that "Money is the worst of all contraband." By 1917, the Morgans 
and Kuhn, Loeb Company had floated a billion and a half dollars in loans to 
the Allies. The bankers also financed a host of "peace" organizations which 
worked to get us involved in the World War. The Commission for Relief in 
Belgium manufactured atrocity stories against the Germans, while a 
Carnegie organization, The League to Enforce Peace, agitated in Washington 
for our entry into war. This later became the Carnegie Endowment for 
International Peace, which during the 1940s was headed by Alger Hiss. One 
writer* claimed that he had never seen any "peace movement" which did not 
end in war. 

The U.S. Ambassador to Britain, Walter Hines Page, complained that he could not 
afford the position, and was given twenty-five thousand dollars a year spending 
money by Cleveland H. Dodge, president of the National City Bank. H.L. Mencken 
openly accused Page in 1916 of being a British agent, which was unfair. Page was 
merely a bankers' agent. 

On March 5, 1917, Page sent a confidential letter to Wilson. "I think that the 
pressure of this approaching crisis has gone beyond the ability of the Morgan 
Financial Agency for the British and French Govern- 



* 1787 Constitutional Convention 



* NOTE: Emmett Tyrell, Jr., Richmond Times Dispatch, Feb. 15, 1983 "Every peace movement of this 
century has been followed by war." 

83 



ments . . . The greatest help we could give the Allies would be a credit. Unless we go 
to war with Germany, our Government, of course, cannot make such a direct grant 
of credit." 

The Rothschilds were wary of Germany's ability to continue in the war, despite the 
financial chaos caused by their agents, the Warburgs, who were financing the 
Kaiser, and Paul Warburg's brother, Max, who, as head of the German Secret 
Service, authorized Lenin's train to pass through the lines and execute the Bolshevik 
Revolution in Russia. According to Under Secretary of the Navy, Franklin D. 
Roosevelt, America's heavy industry had been preparing for war for a year. Both 
the Army and Navy Departments had been purchasing war supplies in large 
amounts since early in 1916. Cordell Hull remarks in his Memoirs: 

"The conflict forced the further development of the income-tax principle. Aiming, 
as it did, at the one great untaxed source of revenue, the income-tax law had been 
enacted in the nick of time to meet the demands of the war. And the conflict also 
assisted the putting into effect of the Federal Reserve System, likewise in the nick of 
time. "70 

One may ask, in the nick of time for whom? Certainly not for the American people, 
who had no need for "mobilization of credit" for a European war, or to enact an 
income tax to finance a war. Hull's statement affords a rare glimpse into the 
machinations of our "public servants". 

The Notes of the Journal of Political Economy, October, 1917, state: 

"The effect of the war upon the business of the Federal Reserve Banks has required 
an immense development of the staffs of these banks, with a corresponding increase 
in expenses. Without, of course, being able to anticipate so early and extensive a 
demand for their services in this connection, the framers of the Federal Reserve Act 
had provided that the Federal Reserve Banks should act as fiscal agents of the 
Government." 

The bankers had been waiting since 1887 for the United States to enact a central 
bank plan so that they could finance a European war among the nations whom they 
had already bankrupted with armament and "defense" programs. The most 
demanding function of the central bank mechanism is war finance. 

On October 13, 1917, Woodrow Wilson made a major address, stating: 

"It is manifestly imperative that there should be a complete mobilization of the 
banking reserves of the United States. The burden and the privilege (of the Allied 
loans) must be shared by every banking institution in the country. I believe that 
cooperation on the part of the banks is a patriotic duty at this time, and that 
membership in the Federal Reserve System is a distinct and significant evidence of 
patriotism." 



70 Cordell Hull, Memoirs, Macmillan, New York, 1948, v. 1, page 76 

84 



E.W. Kemmerer writes that "As fiscal agents of the Government, the federal 
reserve banks rendered the nations services of incalculable value after our 
entrance into the war. They aided greatly in the conservation of our gold 
resources, in the regulation of our foreign exchanges, and in the 
centralization of our financial energies. One shudders when he thinks what 
might have happened if the war had found us with our former decentralized 
and antiquated banking system." 

Mr. Kemmerer' s shudders ignore the fact that if we had kept "our 
antiquated banking system" we would not have been able to finance the 
World War or to enter as a participant ourselves. 

Woodrow Wilson himself did not believe in his crusade to save the world for 
democracy. He later wrote that "The World War was a matter of economic 
rivalry. " 

On being questioned by Senator McCumber about the circumstances of our 
entry into the war, Wilson was asked, "Do you think if Germany had 
committed no act of war or no act of injustice against our citizens that we 
would have gotten into this war? " 

"I do think so," Wilson replied. 

"You think we would have gotten in anyway?" pursued McCumber. 

Tdo," said Wilson. 

In Wilson's War Message in 1917, he included an incredible tribute to the 
Communists in Russia who were busily slaughtering the middle class in that 
unfortunate country. 

"Assurance has been added to our hope for the future peace of the world by 
the wonderful and heartening things that have been happening in the last few 
weeks in Russia. Here is a fit partner for a League of Honor. "71 

Wilson's paean to a bloodthirsty regime which has since murdered sixty-six million 
of its inhabitants in the most barbarous manner exposes his true sympathies and his 
true backers, the bankers who had financed the blood purge in Russia. When the 
Communist Revolution seemed in doubt, Wilson sent his personal emissary, Elihu 
Root, to Russia with one hundred million dollars from his Special Emergency War 
Fund to save the toppling Bolshevik regime. 

The documentation of Kuhn, Loeb Company's involvement in the establishment of 
Communism in Russia is much too extensive to be quoted here, but we include one 
brief mention, typical of the literature on this subject. In his book, Czarism and the 
Revolution, Gen. Arsene de Goulevitch writes, 



71 Public Papers of Woodrow Wilson, Dodd & Baker, v.5, p. 12-13 

85 



"Mr. Bakmetiev, the late Russian Imperial Ambassador to the United States, 
tells us that the Bolsheviks, after victory, transferred 600 million roubles in 
gold between the years 1918-1922 to Kuhn, Loeb Company." 

After our entry into World War I, Woodrow Wilson turned the government 
of the United States over to a triumvirate of his campaign backers, Paul 
Warburg, Bernard Baruch and Eugene Meyer. Baruch was appointed head 
of the War Industries Board, with life and death powers over every factory in 
the United States. Eugene Meyer was appointed head of the War Finance 
Corporation, in charge of the loan program which financed the war. Paul 
Warburg was in control of the nation's banking system*. 

Knowing that the overwhelming sentiment of the American people during 
1915 and 1916 had been anti-British and pro-German, our British allies 
viewed with some trepidation the prominence of Paul Warburg and Kuhn, 
Loeb Company in the prosecution of the war. They were uneasy about his 
high position in the Administration because his brother, Max Warburg, was 
at that time serving as head of the German Secret Service. On December 12, 
1918, the United States Naval Secret Service Report on Mr. Warburg was as 
follows: 

"WARBURG, PAUL: New York City. German, naturalized citizen, 1911. 
was decorated by the Kaiser in 1912, was vice chairman of the Federal 
Reserve Board. Handled large sums furnished by Germany for Lenin and 
Trotsky. Has a brother who is leader of the espionage system of Germany. " 

Strangely enough, this report, which must have been compiled much earlier, 
while we were at war with Germany, is not dated until December 12, 1918, 
AFTER the Armistice had been signed. Also, it does not contain the 
information that Paul Warburg resigned from the Federal Reserve Board in 
May, 1918, which indicates that it was compiled before May, 1918, when Paul 
Warburg would theoretically have been open to a charge of treason because 
of his brother's control of Germany's Secret Service. 

Paul Warburg's brother Felix in New York was a director of the Prussian 
Life Insurance Company of Berlin, and presumably would not have liked to 
see too many of his policyholders killed in the war. On September 26, 1920, 
The New York Times mentioned in its obituary of Jacob Schiff in reference 
to Kuhn, Loeb and Company, "During the world War certain of its members 
were in constant contact with the Government in an advisory capacity. It 
shared in the conferences which were held regarding the organization and 
formation of the Federal Reserve System." 



* NOTE: New York Times, August 10, 1918; "Mr. (Paul) Warburg was the 
author of the plan organizing the War Finance Corporation." 

86 



The 1920 Schiff obituary revealed for the first time that Jacob Schiff, like the 
Warburgs, also had two brothers in Germany during World War I, Philip and 
Ludwig Schiff, of Frankfurt-on-Main, who also were active as bankers to the 
German Government! This was not a circumstance to be taken lightly, as on neither 
side of the Atlantic were the said bankers obscure individuals who had no influence 
in the conduct of the war. On the contrary, the Kuhn, Loeb partners held the 
highest governmental posts in the United States during World War I, while in 
Germany, Max and Fritz Warburg, and Philip and Ludwig Schiff, moved in the 
highest councils of government. From Memoirs of Max Warburg, "The Kaiser 
thumbed the table violently and shouted, 'Must you always be right?' but then 
listened carefully to Max's view on financial matters. "72 

In June, 1918, Paul Warburg wrote a private note to Woodrow Wilson, "I have two 
brothers in Germany who are bankers. They naturally now serve their country to 
their utmost ability, as I serve mine. "73 

Neither Wilson nor Warburg viewed the situation as one of concern, and Paul 
Warburg served out his term on the Federal Reserve Board of Governors, while 
World War I continued to rage. 

The background of Kuhn, Loeb & Company had been exposed in "Truth 
Magazine", edited by George Conroy: 

"Mr. Schiff is head of the great private banking house of Kuhn, Loeb & Co., which 
represents the Rothschild interest on this side of the Atlantic. He has been described 
as a financial strategist and has been for years the financial minister to the great 
impersonal power known as Standard Oil. 

He was hand-in-glove with the Harrimans, the Goulds and the Rockefellers, in all 
their railroad enterprises and has become the dominant power in the railroad and 
financial world in America. 

Louis Brandeis, because of his great ability as a lawyer and for other reasons which will 
appear later, was selected by Schiff as the instrument through which Schiff hoped to achieve 
his ambition in New England. His job was to carry on an agitation which would undermine 
public confidence in the New Haven system and cause a decrease in the price of its securities, 
thus forcing them on the market for the wreckers to buy. "74 

We mention Schiff 's lawyer, Brandeis, here because the first available appointment on the 
Supreme Court of the United States which Woodrow Wilson was allowed to fill was given to 
the Kuhn, Loeb lawyer, Brandeis. 

Not only was the U.S. Food Administration managed by Hoover's director, Lewis 
Lichtenstein Strauss, who married into the Kuhn Loeb Company by marrying Alice 
Hanauer, daughter of partner Jerome 



72 Max Warburg, Memoirs of Max Warburg, Berlin, 1936 

73 David Farrar, The Warburgs, Michael Joseph, Ltd., London, 1974 

74 "Truth Magazine", George Conroy, editor, Boston, issue of December 16, 1912 

87 



Hanauer, but in the most critical field, military intelligence, Sir William 
Wiseman, chief of the British Secret Service, was a partner of Kuhn, Loeb & 
Company. He worked most closely with Wilson's alter ego, Col. House. 
"Between House and Wiseman there were soon to be few political secrets, 
and from their mutual comprehension resulted in large measure our close 
cooperation with the British. " 75 

One example of House's cooperation with Wiseman was a confidential 
agreement which House negotiated pledging the United States to enter into 
World War I on the side of the Allies. Ten months before the election which 
returned Wilson to the White House in 1916 'because he kept us out of war', 
Col. House negotiated a secret agreement with England and France on behalf 
of Wilson which pledged the United States to intervene on behalf of the 
Allies. On March 9, 1916, Wilson formally sanctioned the undertaking. 76 

Nothing could more forcefully illustrate the duplicity of Woodrow Wilson's 
nature than his nationwide campaign on the slogan, "He kept us out of war", 
when he had pledged ten months earlier to involve us in the war on the side 
of England and France. This explains why he was regarded with such 
contempt by those who learned the facts of his career. H.L. Mencken wrote 
that Wilson was "the perfect model of the Christian cad", and that we ought 
"to dig up his bones and make dice of them." 

According to The New York Times, Paul Warburg's letter of resignation 
stated that some objection had been made because he had a brother in the 
Swiss Secret Service. The New York Times has never corrected this blatant 
falsehood, perhaps because Kuhn, Loeb Company owned a controlling 
interest in its stock. Max Warburg was not Swiss, and although he had 
probably come into contact with the Swiss Secret Service during his term of 
office as head of the German Secret Service, no responsible editor at The 
New York Times could have been unaware of the fact that Max Warburg 
was German, and that his family banking house was in Hamburg, and that 
he held a number of high positions in the German Government. He 
represented Germany at the Versailles Peace Conference, and remained 
peacefully in Germany until 1939, during a period when persons of his 
religion were being persecuted. To avoid injury during the approaching war, 
when bombs would rain on Germany, Max Warburg was allowed to sail to 
New York, his funds intact. 

At the outset of World War I, Kuhn, Loeb Company had figured in the 
transfer of German shipping interests to other control. Sir Cecil 



75 Edward M. House, The Intimate Papers of Col. House, edited by Charles Seymour, Vol. II, p. 399. Houghton, 
Mifflin Co. 

76 George Sylvester Viereck, The Strangest Friendship in History, Woodrow Wilson and Col. House, p. 106 

88 



Spring-Rice, British Ambassador to the United States, in a letter to Lord Grey 
wrote: 

"Another matter is the question of the transfer of the flag to the Hamburg Amerika 
ships. The company is practically a German Government affair. The ships are used 
for Government purposes, the Emperor himself is a large shareholder, and so is the 
great banking house of Kuhn, Loeb Company. A member of that house (Warburg) 
has been appointed to a very responsible position in New York, although only just 
naturalized. He is concerned in business with the Secretary of the Treasury, who is 
the President's son-in-law. It is he who is negotiating on behalf of the Hamburg 
Amerika Shipping Company. "77 

On November 13, 1914, in a letter to Sir Valentine Chirol, Spring-Rice wrote, (p. 
241, v. 2) 

"I was told today that The New York Times has been practically acquired by Kuhn, 
Loeb and Schiff, special protege of the (German) Emperor. Warburg, nearly related 
to Kuhn Loeb and Schiff is a brother of the well known Warburg of Hamburg, the 
associate of Ballin (Hamburg) Amerika line), is a member of the Federal Reserve 
Board or rather THE member. He practically controls the financial policy of the 
Administration, and Paish & Blackett (England) had mainly to negotiate with him. 
Of course, it was exactly like negotiating with Germany. Everything that was said 
was German property. " 

Col. Garrison wrote in Roosevelt, Wilson and the Federal Reserve Law, that 
"Through the banking House of the Kuhn Loeb Company, a powerful weapon 
would have been placed in the hands of the German Kaiser over the destiny of 
American business and American citizens. " 78 

Garrison was referring to the Hamburg Amerika affair. 

It seemed strange that Woodrow Wilson felt it necessary to place the nation in the 
hands of three men whose personal history was one of ruthless speculation and the 
quest for personal gain, or that during war with Germany, he found as persons of 
supreme trust a German immigrant naturalized in 1911, the son of an immigrant 
from Poland, and the son of an immigrant from France. Bernard Baruch first 
attracted attention on Wall Street in 1890 while working for A.A. Housman & Co. 

In 1896 he merged the six principal tobacco companies of the United States into the 
Consolidated Tobacco Company, forcing James Duke and the American Tobacco 
Trust to enter into this combination. The second great trust set up by Baruch 
brought the copper industry into the hands 



77 Letters and Friendships of Sir Cecil Spring-Rice, p. 219-220 

78 Col. Elisha Garrison, Roosevelt, Wilson and the Federal Reserve Law, Christopher Publishing 
House, Boston, 1931, p. 260 

89 



of the Guggenheim family, who have controlled it ever since. Baruch worked 
with Edward H. Harriman, who was Schiff's front man in controlling 
America's railway system for the Rothschild family. Baruch and Harriman 
also combined their talents to gain control over the New York City transit 
system, which has been in perilous financial condition ever since. 

In 1901, Baruch formed the firm of Baruch Brothers, bankers, with his 
brother Herman, in New York. In 1917, when Baruch was appointed 
Chairman of the War Industries Board, the name was changed to Hentz 
Brothers. 

Testifying before the Nye Committee on September 13, 1937, Bernard 
Baruch stated that "All wars are economic in their origin." So much for 
religious and political disagreements, which had been specially touted as the 
cause of wars.* 

A profile in the "New Yorker" magazine reported that Baruch made a profit 
of seven hundred fifty thousand dollars in one day during World War I, after 
a phony peace rumor was planted in Washington. In "Who's Who", Baruch 
mentions that he was a member of the Commission which handled all 
purchasing for the Allies during World War I. In fact, Baruch WAS the 
Commission. He spent the American taxpayer's money at the rate of ten 
billion dollars a year, and was also the dominant member of the Munitions 
Price-Fixing Committee. He set the prices at which the Government bought 
war materials. It would be naive to presume that the orders did not go to 
firms in which he and his associates had more than a polite interest. 

dictator over American manufacturers.* At the Nye Committee hearings in 
1935, Baruch testified, 

"President Wilson gave me a letter authorizing me to take over any industry 
or plant. There was Judge Gary, President of United States Steel, whom we 
were having trouble with, and when I showed him that letter, he said, T 
guess we will have to fix this up', and he did fix it up." 

Some members of Congress were curious about Baruch's qualifications to exercise 
life and death powers over American industry in time of war. He was not a 
manufacturer, and had never been in a factory. When he was called before a 
Congressional Committee, Bernard Baruch stated that his profession was 
"Speculator". A Wall Street gambler had been made Czar of American Industry. 



* NOTE: Baruch also stated in this testimony, "I carried through the war three major investments, 
Alaska Juneau Gold Mining Company (with partner Eugene Meyer), Texas Gulf Sulphur, and Atolia 
Mining Company (tungsten)." Rep. Mason, Illinois, told the House on February 21, 1921 that Baruch 
made more than $50 million in copper during the war. 

* Baruch chose as Assistant Chairman of the War Industries Board a fellow Wall Street speculator, 
Clarence Dillon (Lapowitz). See biographies. 

90 



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91 



HJU-J* Of E ML'il jWvll 





Chart I 

reveals the linear connection between the Rothschilds and the Bank of England, 
and the London banking houses which ultimately control the Federal Reserve Banks 
through their stockholdings of bank stock and their subsidiary firms in New York. 
The two principal Rothschild representatives in New York, J.P. Morgan Co., and 
Kuhn, Loeb & Co. were the firms which set up the Jekyll Island Conference at 
which the Federal Reserve Act was drafted, who directed the subsequent successful 
campaign to have the plan enacted into law by Congress, and who purchased the 
controlling amounts of stock in the Federal Reserve Bank of New York in 1914. 
These firms had their principal officers appointed to the Federal Reserve Board of 
Governors and the Federal Advisory Council in 1914. 

In 1914 a few families (blood or business related) owning controlling stock in 
existing banks (such as in New York City) caused those banks to purchase 
controlling shares in the Federal Reserve regional banks. 

Examination of the charts and text in the House Banking Committee Staff Report of 
August, 1976 and the current stockholders list of the 12 regional Federal Reserve 
Banks shows this same family control. 



Baruch's erstwhile partner, Eugene Meyer, (Alaska- Juneau Gold Mining Co.), later 
claimed that Baruch was a nitwit, and that Meyer, with his family banking 
connections (Lazard Freres), had guided Baruch's investment career. These claims 
appeared in the fiftieth anniversary edition of The Washington Post, editorial page, 
June 4, 1983, with a parting shot from Meyer's editor, Al Friendly, that "Every 
journalist in Washington, Meyer included, knew that Bernard M. Baruch was a self- 
aggrandizing phony." 

The third member of the Triumvirate, Eugene Meyer, was son of the partner in the 
international banking house of Lazard Freres, of Paris and New York. In My Own 
Story Baruch explains how Meyer became head of the War Finance Corporation. 

"At the outset of World War One," he says, "I sought out Eugene Meyer, Jr 

who was a man of the highest integrity with a keen desire to be of public service. "79 

The nation has suffered greatly from persons who desired to be of public service, 
because their desires often went considerably beyond their passion for office. In fact, 
Meyer and Baruch had operated an Alaska venture, Alaska- Juneau Gold Mining 
Company in 1915, and had worked together on other financial schemes. Meyer's 
family house of Lazard Freres specialized in international gold movements. 



79 Bernard Baruch, My Own Story, Henry-Holt Company, New York, 1957, p. 194 

94 



Eugene Meyer's stewardship of the War Finance Corporation comprises one of the 
most amazing financial operations ever partially recorded in this country. We say 
"partially recorded", because subsequent Congressional investigations revealed that 
each night, the books were being altered before being brought in for the next day's 
investigation. Louis McFadden, Chairman of the House Banking and Currency 
Committee, figured in two investigations of Meyer, in 1925, and again in 1930, when 
Meyer was proposed as Governor of the Federal Reserve Board. The Select 
Committee to Investigate the Destruction of Government Bonds, submitted, on 
March 2, 1925, "Preparation and Destruction of Government Bonds~68th 
Congress, 2d Session, Report No. 1635: 

p. 2. "Duplicate bonds amounting to 2314 pairs and duplicate coupons amounting to 
4698 pairs ranging in denominations from $50 to $10,000 have been redeemed to 
July 1, 1924. Some of these duplications have resulted from error and some from 
fraud." 

These investigations may explain why, at the end of World War One, Eugene Meyer 
was able to buy control of Allied Chemical and Dye Corporation, and later on, the 
nation's most influential newspaper, The Washington Post. The duplication of 
bonds, "one for the government, one for me" in denominations to the amount of 
$10,000 each, resulted in a tidy sum. 

p. 6 of these Hearings. "These transactions of the Treasury prior to June 20, 1920 
(including settlements for purchases and sales), executed by the War Finance Corporation 
(Eugene Meyer, managing director), were largely directed by the managing director of the 
War Finance Corporation, and settlements with the Treasury were made principally by 
him with the Assistant Secretary of the Treasury, and the books show that the basis of the 
price paid by the Government for over $1,894 millions worth of bonds ($1,894,000,000.00), 
which the Treasury purchased through the War Finance Corporation was not the market 
price and was not the cost of the bond plus interest, and the elements entering into the 
settlement are not disclosed by the correspondence. The managing director of the War 
Finance Corporation stated that he and an Assistant Secretary of the Treasury (Jerome J. 
Hanauer, partner of Kuhn, Loeb Co. whose daughter married Lewis L. Strauss) agreed to 
the price, and it was simply an arbitrary figure set by an Assistant Secretary of the 
Treasury as to the bonds so purchased by the War Finance Corporation. During the period 
of these transactions and up until quite a recent date the managing director of the War 
Finance Corporation, Eugene Meyer, Jr., in his private capacity maintained an office at No. 
14 Wall Street, New York City, and through the War Finance Corporation sold about $70 
millions in bonds to the Government, and also bought through the War Finance 
Corporation about $10 millions in bonds, and approved the bills for most, if not all, of these 
bonds in his official capacity as managing director of the War Finance Corporation. When 
these transactions, just referred to, were disclosed to the committee in open hearing, the 
managing director 

95 






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96 



CHART II 

This chart shows the interlocking banking directorates which were revealed by 
the backgrounds of the officials selected to be the original members of the 

Federal Advisory Council in 1914. The principals were the same bankers who 

had been present or represented at the Jekyll Island Conference in 1910, and 
during the campaign to have the Federal Reserve Act enacted into law by 

Congress in 1913. These officials represented the largest stock holdings in the 
New York banks which bought the controlling stock in the Federal Reserve 
Bank of New York, and also were the principal correspondent banks of the 

banks in other Federal Reserve districts who, in turn, selected their officials to 
represent them on the Federal Advisory Council. 



appeared before the committee and stated the fact that commissions were 
paid on these transactions, they were in turn paid over to the brokers, 
selected by the managing director, who executed the orders issued by his 
brokerage house, and immediately after this disclosure to the committee, the 
managing director employed Ernst and Ernst, certified public accountants, 
to audit the books of the War Finance Corporation, who did, upon 
completion of the examination of these books, report to the committee that 
all moneys received by the brokerage house of the managing director had 
been accounted for. While simultaneously with the examination being made 
by the committee, the certified public accountants, heretofore referred to, 
were nightly carrying on their examination, it was discovered by your 
committee that alterations and changes were being made in the books of 
record covering these transactions, and when the same was called to the 
attention of the treasurer of the War Finance Corporation, he admitted to 
the committee that changes were being made. To what extent these books 
have been altered during the process the committee have not been able to 
determine. After June, 1921, about $10 billions worth of securities were 
destroyed. " 

It was Eugene Meyer's Washington Post, (under the direction of his 
daughter, Katherine Graham) which was later to drive a President of the 
United States from the White House on the grounds that he had knowledge 
of a burglary. What are we to think of the revelations of duplications of 
hundreds of millions of dollars worth of bonds during 



97 



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98 



CHART III 

The J. Henry Schroder Banking Company chart encompasses the entire history 
of the twentieth century, embracing as it does the program (Belgian Relief 
Commission) which provisioned Germany from 1915-1918 and dissuaded 
Germany from seeking peace in 1916; financing Hitler in 1933 so as to make a 
Second World War possible; backing the Presidential campaign of Herbert 
Hoover; and even at the present time, having two of its major executives of its 
subsidiary firm, Bechtel Corporation serving as Secretary of Defense and 
Secretary of State in the Reagan Administration. 

The head of the Bank of England since 1973, Sir Gordon Richardson, 
Governor of the Bank of England (controlled by the House of Rothschild), was 
chairman of J. Henry Schroder, New York, and Schroder Banking 
Corporation, New York, as well as Lloyd's Bank of London, and Rolls Royce. 
He maintains a residence on Sutton Place in New York City, and as head of 
"The London Connection ", can be said to be the single most influential banker 
in the world. 



Meyer's directorship of the War Finance Corporation, the alteration of the 
books during a Congressional investigation, and the fact that Meyer came 
out of this situation with many millions of dollars with which he proceeded to 
buy Allied Chemical Corporation, The Washington Post, and other 
properties? Incidentally, Lazard Brothers, Meyer's family banking house, 
personally manages the fortunes of many of our political luminaries, 
including the Kennedy family fortune. 

Besides these men, Warburg, Baruch, and Meyer, a host of J.P. Morgan Co., 
and Kuhn, Loeb Co., partners, employees, and satellites came to Washington 
after 1917 to administer the fate of the American people. 

The Liberty Loans, which sold bonds to our citizens, were nominally in the 
jurisdiction of the United States Treasury, under the leadership of Wilson's 
Secretary of the Treasury, William G. McAdoo, whom Kuhn, Loeb Co. had 
placed in charge of the Hudson-Manhattan Railway Co. in 1902. Paul 
Warburg had most of the Kuhn Loeb Co. firm with him in Washington 
during the War. Jerome Hanauer, partner in Kuhn, Loeb Co., was Assistant 
Secretary of the Treasury in charge of Liberty Loans. The two Under- 
secretaries of the Treasury during the War were S. Parker Gilbert and 
Roscoe C. Leffingwell. Both Gilbert and Leffingwell came to the Treasury 
from the law firm of Cravath and Henderson, and returned 

99 



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too 



CHART IV 

The Peabody-Morgan chart shows the London Connection of these prominent 
banking firms, which have been headquartered in London since their inception. 

The Peabody fortune set up an Educational Fund in 1865, which was later 

absorbed by John D. Rockefeller into the General Educational Board in 1905, 

which, in turn, was absorbed by the Rockefeller Foundation in 1960. 



to that firm when they had fulfilled their mission for Kuhn, Loeb Co. in the 
Treasury. Cravath and Henderson were the lawyers for Kuhn Loeb Co. 
Gilbert and Leffingwell subsequently received partnerships in J.P. Morgan 
Co. 

Kuhn, Loeb Company, the nation's largest owners of railroad properties in 
this country and in Mexico, protected their interests during the First World 
War by having Woodrow Wilson set up a United States Railroad 
Administration. The Director-General was William McAdoo, Comptroller of 
the Currency. Warburg replaced this set up in 1918 with a tighter 
organization which he called the Federal Transportation Council. The 
purpose of both of these organizations was to prevent strikes against Kuhn, 
Loeb Company during the War, in case the railroad workers should try to 
get in wages some of the millions of dollars in wartime profits which Kuhn, 
Loeb received from the United States Government. 

Among the important bankers present in Washington during the War was 
Herbert Lehman, of the rapidly rising firm of Lehman Brothers, Bankers, 
New York, Lehman was promptly put on the General Staff of the Army, and 
given the rank of Colonel. 

The Lehmans had had prior experience in "taking the profits out of war", a 
double entendre and one of Baruch's favorite phrases. In Men Who Rule 
America, Arthur D. Howden Smith writes of the Lehmans during the Civil 
War, "They were often agents, fixers for both sides, intermediaries for 
confidential communications and handlers of the many illicit transactions in 
cotton and drugs for the Confederacy, purveyors of information for the 
North. The Lehmans, with Mayer in Montgomery, the first capital of the 
Confederacy, Henry in New Orleans, and Emanuel in New York were ideally 
situated to take advantage of every opportunity for profit which appeared. 
They seem to have missed few chances. "80 



80 Arthur D. Howden Smith, Men Who Rule America, Bobbs Merrill, N.Y. 1935, p. 
112 

101 



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CHART V 

The David Rockefeller chart shows the link between the Federal Reserve 
Bank of New York, Standard Oil of Indiana, General Motors, and Allied 
Chemical Corporation (Eugene Meyer family) and Equitable Life (J.P. 
Morgan). 



Other appointments during the First World War were as follows: 

J.W. Mcintosh, director of the Armour meat-packing trust, who was made 
chief of Subsistence for the United States Army in 1918. He later became 
Comptroller of the Currency during Coolidge's Administration, and ex- 
officio member of the Federal Reserve Board. During the Harding 
Administration, he did his bit as Director of Finance for the United States 
Shipping Board when the Board sold ships to the Dollar Lines for a 
hundredth of their cost and then let the Dollar Line default on its payments. 
After leaving public service, J.W. Mcintosh became a partner in J.W. 
Wollman Co., New York Stockbrokers. 

W.P.G. Harding, Governor of the Federal Reserve Board, was also managing 
director of the War Finance Corporation under Eugene Meyer. 

George R. James, member of the Federal Reserve Board in 1923-24, had 
been Chief of the Cotton Section of the War Industries Board. 

Henry P. Davison, senior partner in J.P. Morgan Co., was appointed head of 
the American Red Cross in 1917 in order to get control of the three hundred 
and seventy million dollars cash which was collected from the American 
people in donations. 

Ronald Ransom, banker from Atlanta, and Governor of the Federal Reserve 
Board under Roosevelt in 1938-39, had been the Director in Charge of 
Personnel for Foreign Service for the American Red Cross in 1918. 

John Skelton Williams, Comptroller of the Currency, was appointed 
National Treasurer of the American Red Cross. 

President Woodrow Wilson, the great liberal who signed the Federal Reserve 
Act and declared war against Germany, had an odd career for a man who is 
now enshrined as a defender of the common people. His chief supporter in 
both his campaigns for the Presidency was Cleveland H. Dodge, of Kuhn 
Loeb, who controlled National City Bank of New York. Dodge was also 
President of the Winchester Arms Company and Remington Arms 
Company. He was very close to President Wilson 

103 



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104 



CHART VI 

This chart shows the interlocks between the Federal Reserve Bank of New 
York, J. Henry Schroder Banking Corp., J. Henry Schroder Trust Co., 
Rockefeller Center, Inc., Equitable Life Assurance Society (J.P. Morgan), 
and the Federal Reserve Bank of Boston. 



throughout the great democrat's political career. Wilson lifted the embargo 
on shipment of arms to Mexico on February 12, 1914, so that Dodge could 
ship a million dollars worth of arms and ammunition to Carranza and 
promote the Mexican Revolution. Kuhn, Loeb Co. which owned the Mexican 
National Railways System, had become dissatisfied with the administration 
of Huerta and had him kicked out. 

When the British naval auxiliary Lusitania was sunk in 1915, it was loaded 
with ammunition from Dodge's factories. Dodge became Chairman of the 
"Survivors of Victims of the Lusitania Fund", which did so much to arouse 
the public against Germany. Dodge also was notorious for using professional 
gangsters against strikers in his plants, yet the liberal Wilson does not appear 
to have ever been disturbed by this. 

Another clue to Wilson's peculiar brand of liberalism is to be found in 
Chaplin's book Wobbly, which relates how Wilson scrawled the word 
"REFUSED" across the appeal for clemency sent him by the aging and ailing 
Eugene Debs, who had been sent to Atlanta Prison for "speaking and writing 
against war". The charge on which Debs was convicted was "spoken and 
written denunciation of war". This was treason to the Wilson dictatorship, 
and Debs was imprisoned. As head of the Socialist Party, Debs ran for the 
Presidency from Atlanta Prison, the only man ever to do so, and polled more 
than a million votes. It was ironic that Debs' leadership of the Socialist Party, 
which at that time represented the desires of many Americans for an honest 
government, should fall into the sickly hands of Norman Thomas, a former 
student and admirer of Woodrow Wilson at Princeton University. Under 
Thomas' leadership, the Socialist Party no longer stood for anything, and 
suffered a steady decline in influence and prestige. 

Wilson continued to be deeply involved in the Bolshevik Revolution, as were 
House and Wiseman. Vol. 3, p. 421 of House Intimate Papers records a cable 
from Sir William Wiseman to House from London, May 1, 1918, suggesting 
allied intervention at the invitation of the Bolsheviki 

105 






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106 



CHART VII 

This chart shows the interlocks of the Federal Reserve Bank of New York 
with Citibank, Guaranty Bank and Trust Co. (J.P. Morgan), J.P. Morgan 
Co., Morgan Guaranty Trust Co., Alex Brown & Sons (Brown Brothers 
Harriman), Kuhn Loeb & Co., Los Angeles and Salt Lake RR (controlled by 
Kuhn Loeb Co.), and Westinghouse (controlled by Kuhn Loeb Co.). 



to help organize the Bolshevik forces. Lt. Col. Norman Thwaites, in his 
memoirs, Velvet and Vinegar says, 

"Often during the years 1917-20 when delicate decisions had to be made, I 
consulted with Mr. 

(Otto) Kahn, whose calm judgment and almost uncanny foresight as to 
political and economic 

tendencies proved most helpful. Another remarkable man with whom I have 
been closely 

associated is Sir William Wiseman who was advisor on American affairs to 
the British delegation 

at the Peace Conference, and liaison officer between the American and 
British government 

during the war. He was rather more the Col. House of this country in his 
relations with Downing 

Street. "81 

In the summer of 1917, Woodrow Wilson named Col. House to head the 
American War Mission to the Interallied War Conference, the first 
American mission to a European council in history. House was criticized for 
naming his son-in-law, Gordon Auchincloss, as his assistant on this mission. 
Paul Cravath, the lawyer for Kuhn, Loeb Company, was third in charge of 
the American War Mission. Sir William Wiseman guided the American War 
Mission in its conferences. In The Strangest Friendship in History, Viereck 
writes, 

"After America entered the War, Wiseman, according to Northcliffe, was the 
only man who had 

access at all times to the Colonel and to the White House. Wiseman rented an 
apartment in the 

house where the Colonel lived. David Lawrence referred to the Fifty- 
Third Street house (New York City) jestingly as the American No. 10 



Downing St Col. House had a special code used only with Sir 

William Wiseman. Col. House was Bush, the Morgans were Haslani, 
and Trotsky was Keble."82 

Thus these two "unofficial" advisors to the British and American 
governments had a code solely for each other, which no one else could 
understand. Even stranger was the fact that the international Communist 



81 Lt. Col. Norman Thwaites, Velvet and Vinegar, Grayson Co., London, 
1932 

82 George Sylvester Viereck, The Strangest Friendship in History, Woodrow 
Wilson and Col. House, Liveright, N.Y. 1932, p. 172 



107 



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108 



CHART VIII 

This chart shows the link between the Federal Reserve Bank of New York, 

Brown Brothers Harriman, Sun Life Assurance Co. (N.M. Rothschild and 

Sons), and the Rockefeller Foundation. 



espionage apparatus for many years used Col. House's book, Philip Dru, 
Administrator, as their official code book. Francois Coty writes, 

"Gorodin, Lenin's agent in China, was alleged to have with him a copy of the 
book published by 

Col. House, Philip Dru, Administrator and a code expert who lived in China 
told this writer that the purpose of having constant access to this book by 
Gorodin was to use it for coding and decoding messages. "83 

After the Armistice, Woodrow Wilson assembled the American Delegation to 
the Peace Conference, and embarked for Paris. It was, on the whole, a most 
congenial group, consisting of the bankers who had always guided Wilson's 
policies. He was accompanied by Bernard Baruch, Thomas W. Lamont of 
J.P. Morgan Co., Albert Strauss of J & W Seligman bankers, who had been 
chosen by Wilson to replace Paul Warburg on the Federal Reserve Board of 
Governors, J.P. Morgan, and Morgan lawyers Frank Polk and John W. 
Davis. Accompanying them were Walter Lippmann, Felix Frankfurter, 
Justice Brandeis, and other interested parties. Mason's biography of 
Brandeis states that "In Paris in June of 1919, Brandeis met with such 
friends as Paul Warburg, Col. House, Lord Balfour, Louis Marshall, and 
Baron Edmond de Rothschild." 

Indeed, Baron Edmond de Rothschild served as the genial host to the leading 
members of the American Delegation, and even turned over his Paris 
mansion to them, although the lesser members had to rough it at the elegant 
Hotel Crillon with Col. House and his personal staff of 201 servants. 

Baruch later testified before the Graham Committee of the Senate Foreign 
Relations Committee, "I was economic advisor with the peace mission. 
GRAHAM: Did you frequently advise the President while there? BARUCH: 
Whenever he asked my advice I gave it. I had something to do with the 
reparations clauses. I was the American Commissioner in charge of what 
they called the Economic Section. I was a 



83 Francois Coty, Tearing Away the Veil, Paris, 1940 

109 










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110 



CHART IX 

This chart shows the interlocks between the Federal Reserve Bank of New 

York and J.P. Morgan Co., Morgan Guaranty Trust Co., and the Rothschild 

affiliates of Royal Bank of Canada, Sun Life Assurance Co. of Canada, Sun 

Alliance, and London Assurance Group. 



member of the Supreme Economic Council in charge of raw metals. 
GRAHAM: Did you sit in the council with the gentlemen who were 
negotiating the treaty? BARUCH: Yes, sir, some of the time. GRAHAM: All 
except the meetings that were participated in by the Five? (The Five being 
the leaders of the five allied nations). BARUCH: And frequently those also." 

Paul Warburg accompanied Wilson on the American Commission to 
Negotiate Peace as his chief financial advisor. He was pleasantly surprised to 
find at the head of the German delegation his brother, Max Warburg, who 
brought along Carl Melchior, also of M.M. Warburg Company, William 
Georg von Strauss, Franz Urbig, and Mathias Erzberger. 

Thomas W. Lamont states in his privately printed memoirs, Across World 
Frontiers, "The German delegation included two German bankers of the 
Warburg firm whom I happened to know slightly and with whom I was glad 
to talk informally, for they seemed to be striving earnestly to offer some 
reparations composition that might be acceptable to the Allies. "84 Lamont 
was also pleased to see Sir William Wiseman, chief advisor to the British 
delegation. 

The bankers at the conference convinced Wilson that they needed an 
international government to facilitate their international monetary 
operations. Vol. IV, p. 52, Intimate Papers of Col. House quotes a message 
from Sir William Wiseman to Lord Reading, August 16, 1918, "The 
President has two main principles in view; there must be a League of Nations 
and it must be virile. " 

Wilson, who seems to have lived in a world of fantasy, was shocked when 
American citizens booed him during his campaign to have them sign over 
their hard won independence to what appeared to many to be an 
international dictatorship. He promptly went into a depression, and retired 
to his bedroom. His wife immediately shut the White House doors against 
Col. House, and from September 25, 1919 to April 13, 1920, she 



84 Thomas W. Lamont, Across World Frontiers, (Privately printed) 1950, p. 
138 

111 



ruled the United States with the aid of an intimate friend, her "military aide", Col. 
Rixey Smith. As everyone was shut out of their deliberations, no one ever knew 
which of the pair functioned as the President, and which was the Vice President. 

The admirers of Woodrow Wilson were led for decades by Bernard Baruch, who 
stated that Woodrow Wilson was the greatest man he ever knew. Wilson's 
appointments to the Federal Reserve Board, and that body's responsibility for 
financing the First World War, as well as Wilson's handing over the United States 
to the immigrant triumvirate during the War, made him appear to be the most 
important single effector of ruin in American history. 

It is no wonder that after his abortive trip to Europe, where he was hissed and 
jeered in the streets by the French people, and snickered at in the halls of Versailles 
by Orlando and Clemenceau, Woodrow Wilson returned home to take to his bed. 
The sight of the destruction and death in Europe, for which he was directly 
responsible, was perhaps more of a shock than he could bear. The Italian Minister 
Pentaleoni expressed the feelings of the European peoples when he wrote that: 

"Woodrow Wilson is a type of Pecksniff who was now disappeared amid universal 
execration. " 

It is America's misfortune that our subsidized press and educational system have 
been devoted to enshrining a man who colluded in causing so much death and 
sorrow throughout the world. 

The financial cartel suffered only minor setbacks in those crucial years. On 
February 12, 1917, The New York Times reported that "The five members of the 
Federal Reserve Board were impeached on the floor of the House by Rep. Charles 
A. Lindbergh, Republican member of the House Banking and Currency Committee. 
According to Mr. Lindbergh, 'the conspiracy began in' 1906 when the late J.P. 
Morgan, Paul M. Warburg, a present member of the Federal Reserve Board, the 
National City Bank and other banking firms 'conspired' to obtain currency 
legislation in the interest of big business and the appointment of a special board to 
administer such a law, in order to create industrial slaves of the masses, the 
aforesaid conspirators did conspire and are now conspiring to have the Federal 
Reserve Board administered so as to enable the conspirators to coordinate all kinds 
of big business and to keep themselves in control of big business in order to 
amalgamate all the trusts into one great trust in restraint and control of trade and 
commerce." The impeachment resolution was not acted on by the House. 

The New York Times reported on August 10, 1918, "Mr. Warburg's term having 
expired, he voluntarily retired from the Federal Reserve Board." Thus the previous 
intimation that Mr. Warburg left the Federal Reserve Board because he had a 
brother in the Secret Service of a foreign 



112 



country, namely, Germany, with whom we were at war, was not the cause of 
his retirement. In any case, he did not leave the Federal Reserve 
Administration, as he immediately took over J.P. Morgan's seat on the 
Federal Advisory Council, from which post he continued to administer the 
Federal Reserve System for the next ten years. 



113 



CHAPTER NINE 

The Agricultural Depression 



When Paul Warburg resigned from the Federal Reserve Board of Governors 
in 1918, his place was taken by Albert Strauss, partner in the international 
banking house of J & W Seligman. This banking house had large interests in 
Cuba and South America, and played a prominent part in financing the 
many revolutions in those countries. Its most notorious publicity came 
during the Senate Finance Committee's investigation in 1933, when it was 
brought out that J & W Seligman had given a $415,000 bribe to Juan Leguia, 
son of the President of Peru, in order to get that nation to accept a loan. 

A partial list of Albert Strauss' directorships, according to "Who's Who", 
shows that he was: Chairman of the Board of the Cuba Cane Sugar 
Corporation; director, Brooklyn Manhattan Transit Co., Coney Island 
Brooklyn RR, New York Rapid Transit, Pierce-Arrow, Cuba Tobacco 
Corporation, and the Eastern Cuba Sugar Corporation. 

Governor Delano resigned in August, 1918, to be commissioned a Colonel in 
the Army. The war ended on November 11, 1918. 

William McAdoo was replaced in 1918 by Carter Glass as Secretary of the 
Treasury. Both Strauss and Glass were present during the secret meeting of 
the Federal Reserve Board on May 18, 1920, when the Agricultural 
Depression of 1920-21 was made possible. 

One of the main lies about the Federal Reserve Act when it was being 
ballyhooed in 1913 was its promise to take care of the farmer. Actually, it has 
never taken care of anybody but a few big bankers. Prof. O.M.W. Sprague, 
Harvard economist, writing in the Quarterly Journal of Economics of 
February, 1914, said: 

"The primary purpose of the Federal Reserve Act is to make sure that there 
will always be an available supply of money and credit in this country to 
meet unusual banking requirements. " 

There is nothing in that wording to help the farmer. 

The First World War had introduced into this country a general prosperity, 
as revealed by the stocks of heavy industry on the New York Exchange in 
1917-1918, by the increase in the amount of money circulated, and by the 
enormous bank clearings during the whole of 1918. It was the assigned duty 
of the Federal Reserve System to get back the vast amount 

114 



of money and credit which had escaped their control during this time of 
prosperity. This was done by the Agricultural Depression of 1920-21. 

The operations of the Federal Reserve Open Market Committee in 1917-18, 
while Paul Warburg was still Chairman, show a tremendous increase in 
purchases of bankers' and trade acceptances. There was also a great increase 
in the purchase of United States Government securities, under the leadership 
of the able Eugene Meyer, Jr. A large part of the stock market speculation in 
1919, at the end of the War when the market was very unsettled, was 
financed with funds borrowed from Federal Reserve Banks with 
Government securities as collateral. Thus the Federal Reserve System set up 
the Depression, first by causing inflation, and then raising the discount rate 
and making money dear. 

In 1914, Federal Reserve Bank rates had dropped from six percent to four 
percent, had gone to a further low of three percent in 1916, and had stayed at 
that level until 1920. The reason for the low interest rate was the necessity for 
floating the billion dollar Liberty Loans. At the beginning of each Liberty 
Loan Drive, the Federal Reserve Board put a hundred million dollars into 
the New York money market through its open market operations, in order to 
provide a cash impetus for the drive. The most important role of the Liberty 
Bonds was to soak up the increase in circulation of the medium of exchange 
(integer of account) brought about by the large amount of currency and 
credit put out during the war. Laborers were paid high wages, and farmers 
received the highest prices for their produce they had ever known. These two 
groups accumulated millions of dollars in cash which they did not put into 
Liberty Bonds. That money was effectively out of the hands of the Wall 
Street group which controlled the money and credit of the United States. 
They wanted it back, and that is why we had the Agricultural Depression of 
1920-21. 

Much of the money was deposited in small country banks in the Middle West 
and West which had refused to have any part of the Federal Reserve System, 
the farmers and ranchers of those regions seeing no good reason why they 
should give a group of international financiers control of their money. The 
main job of the Federal Reserve System was to break these small country 
banks and get back the money which had been paid out to the farmers 
during the war, in effect, ruin them, and this it proceeded to do. 

First of all, a Federal Farm Loan Board was set up which encouraged the 
farmers to invest their accrued money in land on long term loans, which the 
farmers were eager to do. Then inflation was allowed to take its course in this 
country and in Europe in 1919 and 1920. The purpose of the inflation in 
Europe was to cancel out a large portion of the war debts owed by the Allies 
to the American people, and its purpose in this country was to draw in the 
excess moneys which had been distributed to 

115 



the working people in the form of higher wages and bonuses for production. As 
prices went higher and higher, the money which the workers had accumulated 
became worth less and less, inflicting upon them an unfair drain, while the 
propertied classes were enriched by the inflation because of the enormous increase 
in the value of land and manufactured goods. The workers were thus effectively 
impoverished, but the farmers, who were as a class more thrifty, and who were 
more self-sufficient, had to be handled more harshly. 

G.W. Norris, in "Collier's Magazine" of March 20, 1920, said: 

"Rumor has it that two members of the Federal Reserve Board had a plain talk with 
some New 

York bankers and financiers in December, 1919. Immediately afterwards, there was 
a notable decline in transactions on the stock market and a cessation of company 
promotions. It is understood that action in the same general direction has already 
been taken in other sections of the country, as evidence of the abuse of the Federal 
Reserve System to promote speculation in land and commodities appeared." 

Senator Robert L. Owen, Chairman of the Senate Banking and Currency 
Committee, testified at the Senate Silver Hearings in 1939 that: 

"In the early part of 1920, the farmers were exceedingly prosperous. They were 
paying off the mortgages and buying a lot of new land, at the instance of the 
Government—had borrowed money to do it—and then they were bankrupted by a 
sudden contraction of credit and currency which took place in 1920. What took 
place in 1920 was just the reverse of what should have been taking place. Instead of 
liquidating the excess of credits created by the war through a period of years, the 
Federal Reserve Board met in a meeting which was not disclosed to the public. They 
met on the 18th of May, 1920, and it was a secret meeting. They spent all day 
conferring; the minutes made sixty printed pages, and they appear in Senate 
Document 310 of February 19, 1923. The Class A Directors, the Federal Reserve 
Advisory Council, were present, but the Class B Directors, who represented 
business, commerce, and agriculture, were not present. The Class C Directors, 
representing the people of the United States, were not present and were not invited 
to be present. 

Only the big bankers were there, and their work of that day resulted in a 
contraction of credit which had the effect the next year of reducing the national 
income fifteen billion dollars, throwing millions of people out of employment, and 
reducing the value of lands and ranches by twenty billion dollars." 

Carter Glass, member of the Board in 1920 as Secretary of the Treasury, wrote in 
his autobiography, Adventure in Constructive Finance published in 1928; 
"Reporters were not present, of course, as they should not have been and as they 
never are at any bank board meeting in the world. "85 



85 Carter Glass, Adventure in Constructive Finance, Doubleday, N.Y. 1928 

116 



It was Carter Glass who had complained that, if a suggested amendment by Senator 
LaFollette were passed, on the Federal Reserve Act of 1913, to the effect that no 
member of the Federal Reserve Board should be an official or director or 
stockholder of any bank, trust company, or insurance company, we would end up 
by having mechanics and farm laborers on the Board. Certainly mechanics and 
farm laborers could have caused no more damage to the country than did Glass, 
Strauss, and Warburg at the secret meeting of the Federal Reserve Board. 

Senator Brookhart of Iowa testified that at that secret meeting Paul Warburg, also 
President of the Federal Advisory Council, had a resolution passed to send a 
committee of five to the Interstate Commerce Commission and ask for an increase 
in railroad rates. As head of Kuhn, Loeb Co. which owned most of the railway 
mileage in the United States, he was already missing the huge profits which the 
United States Government had paid during the war, and he wanted to inflict new 
price raises on the American people. 

Senator Brookhart also testified that: 

"I went into Myron T. Herrick's office in Paris, and told him that I came there to 
study cooperative banking. He said to me, 'as you go over the countries of Europe, 
you will find that the United States is the only civilized country in the world that by 
law is prohibiting its people from organizing a cooperative system.' I went up to 
New York and talked to about two hundred people. After talking cooperation and 
standing around waiting for my train— I did not specifically mention cooperative 
banking, it was cooperation in general—a man called me off to one side and said, 'I 
think Paul Warburg is the greatest financier we have ever produced. He believes a 
lot more of your cooperative ideas than you think he does, and if you want to consult 
anybody about the business of cooperation, he is the man to consult, because he 
believes in you, and you can rely on him.' A few minutes later I was steered up 
against Mr. Warburg himself, and he said to me, 'You are absolutely right about 
this cooperative idea. I want to let you know that the big bankers are with you. I 
want to let you know that now, so that you will not start anything on cooperative 
banking and turn them against you.' I said, 'Mr. Warburg, I have already prepared 
and tomorrow I am going to offer an amendment to the Lant Bill authorizing the 
establishment of cooperative national banks.' That was the intermediate credit act 
which was then ending to authorize the establishment of cooperative national banks. 
That was the extent of my conversation with Mr. Warburg, and we have not had 
any since." 

Mr. Wingo testified that in April, May, June and July of 1920, the manufacturers 
and merchants were allowed a very large increase in credits. This was to tide them 
through the contraction of credit which was intended to ruin the American farmers, 
who, during this period, were denied all credit. 



117 



At the Senate Hearings in 1923, Eugene Meyer, Jr. put his finger on a 
primary reason for the Federal Reserve Board's action in raising the interest 
rate to 7% on agricultural and livestock paper: 

"I believe," he said, "that a great deal of trouble would have been avoided if 
a larger number of the eligible non-member banks had been members of the 
Federal Reserve System." 

Meyer was correct in pointing this out. The purpose of the Board's action 
was to break those state and joint land stock banks which had steadfastly 
refused to surrender their freedom to the banker's dictatorship set up by the 
System. Kemmerer in the ABC of the Federal Reserve System had written in 
1919 that: 

"The tendency will be toward unification and simplicity which will be 
brought about by the state institutions, in increasing numbers, becoming 
stockholders and depositors in the reserve banks." 

However, the state banks had not responded. 

The Senate Hearings of 1923 investigating the causes of the Agricultural 
Depression of 1920-21 had been demanded by the American people. The 
complete record of the secret meeting of the Federal Reserve Board on May 
18, 1920 had been printed in the "Manufacturers' Record" of Baltimore, 
Maryland, a magazine devoted to the interests of small Southern 
manufacturers. 

Benjamin Strong, Governor of the Federal Reserve Bank of New York, and 
close friend of Montagu Norman, the Governor of the Bank of England, 
claimed at these Hearings: 

"The Federal Reserve System has done more for the farmer than he has yet 
begun to realize. " 

Emmanuel Goldenweiser, Director of Research for the Board of Governors, 
claimed that the discount rate was raised purely as an anti-inflationary 
measure, but he failed to explain why it was a raise aimed solely at farmers 
and workers, while at the same time the System protected the manufacturers 
and merchants by assuring them increased credits. 

The final statement on the Federal Reserve Board's causing the Agricultural 
Depression of 1920-21 was made by William Jennings Bryan. In "Hearst's 
Magazine" of November, 1923, he wrote: 

"The Federal Reserve Bank that should have been the farmer's greatest 
protection has become his greatest foe. The deflation of the farmer was a 
crime deliberately committed. " 

118 



CHAPTER TEN 



The Money Creators 



The editorial page of The New York Times, January 18, 1920, carried an 
interesting comment on the Federal Reserve System. The unidentified writer, 
perhaps Paul Warburg, stated, "The Federal Reserve is a fount of credit, not 
of capital. " This is one of the most revealing statements ever made about the 
Federal Reserve System. It says that the Federal Reserve System will never 
add anything to our capital structure, or to the formation of capital, because 
it is organized to produce credit, to create money for credit money and 
speculations, instead of providing capital funds for the improvement of 
commerce and industry. Simply stated, capitalization would mean the 
providing of notes backed by a precious metal or other commodity. Reserve 
notes are unbacked paper loaned at interest. 

On July 25, 1921, Senator Owen stated on the editorial page of The New 
York Times, The Federal Reserve Board is the most gigantic financial power 
in all the world. Instead of using this great power as the Federal Reserve Act 
intended that it should, the board.. ..delegated this power to the banks, threw 
the weight of its influence toward the support of the policy of German 
inflation. " The senator whose name was on the Act saw that it was not 
performing as promised. 

After the Agricultural Depression of 1920-21, the Federal Reserve Board of 
Governors settled down to eight years of providing rapid credit expansion of 
the New York bankers, a policy which culminated in the Great Depression of 
1929-31 and helped paralyze the economic structure of the world. Paul 
Warburg had resigned in May, 1918, after the monetary system of the United 
States had been changed from a bond-secured currency to a currency based 
upon commercial paper and the shares of the Federal Reserve Banks. 
Warburg returned to his five hundred thousand dollar a year job with Kuhn, 
Loeb Company, but he continued to determine the policy of the Federal 
Reserve System, as President of the Federal Advisory Council and as 
Chairman of the Executive Committee of the American Acceptance Council. 

From 1921 to 1929, Paul Warburg organized three of the greatest trusts in 
the United States, the International Acceptance Bank, largest acceptance 
bank in the world, Agfa Ansco Film Corporation, with headquarters in 
Belgium, and I.G. Farben Corporation whose American 



119 



branch Warburg set up as I.G. Chemical Corporation. The Westinghouse 
Corporation is also one of his creations. 

In the early 1920s, the Federal Reserve System played the decisive role in the re- 
entry of Russia into the international finance structure. Winthrop and Stimson 
continued to be the correspondents between Russian and American bankers, and 
Henry L. Stimson handled the negotiations concluding in our recognition of the 
Soviet after Roosevelt's election in 1932. This was an anti-climax, because we had 
long before resumed exchange relations with Russian financiers. 

The Federal Reserve System began purchasing Russian gold in 1920, and Russian 
currency was accepted on the Exchanges. According to Colonel Ely Garrison, in his 
autobiography, and according to the United States Naval Secret Service Report on 
Paul Warburg, the Russian Revolution had been financed by the Rothschilds and 
Warburgs, with a member of the Warburg family carrying the actual funds used by 
Lenin and Trotsky in Stockholm in 1918. 

An article in the English monthly "Fortnightly", July, 1922, says: 

"During the past year, practically every single capitalistic institution has been 
restored. This is true of the State Bank, private banking, the Stock Exchange, the 
right to possess money to unlimited amount, the right of inheritance, the bill of 
exchange system, and other institutions and practices involved in the conduct of 
private industry and trade. A great part of the former nationalized industries are 
now found in semi-independent trusts." 

The organization of powerful trusts in Russia under the guise of Communism made 
possible the receipt of large amounts of financial and technical help from the United 
States. The Russian aristocracy had been wiped out because it was too inefficient to 
manage a modern industrial state. The international financiers provided funds for 
Lenin and Trotsky to overthrow the Czarist regime and keep Russia in the First 
World War. Peter Drucker, spokesman for the oligarchy in America, declared in an 
article in the Saturday Evening Post in 1948, that: 

"RUSSIA IS THE IDEAL OF THE MANAGED ECONOMY TOWARDS WHICH 
WE ARE MOVING." 

In Russia, the issuance of sufficient currency to handle the needs of their economy 
occurred only after a government had been put in power which had absolute control 
of the people. During the 1920s, Russia issued large quantities of so-called "inflation 
money", a managed currency. The same "Fortnightly" article (of July, 1922) 
observed that: 

"As economic pressure produced the 'astronomical dimensions system' of currency; 
it can never destroy it. Taken alone, the system is self-contained, logically perfected, 
even intelligent. And it can perish only through the collapse or destruction of the 
political edifice which it decorates. " 



120 



"Fortnightly" also remarked, in 1929, that: 

"Since 1921, the daily life of the Soviet citizen is no different from that of the 
American citizen, and the Soviet system of government is more economical. " 

Admiral Kolchak, leader of the White Russian armies, was supported by the 
international bankers, who sent British and American troops to Siberia in 
order to have a pretext for printing Kolchak rubles. At one time in 1920, the 
bankers were manipulating on the London Exchange the old Czarist rubles, 
Kerensky rubles and Kolchak rubles, the values of all three fluctuating 
according to the movements of the Allied troops aiding Kolchak. Kolchak 
also was in possession of considerable amounts of gold which had been seized 
by his armies. After his defeat, a trainload of this gold disappeared in 
Siberia. At the Senate Hearings in 1921 on the Federal Reserve System, it 
was brought out that the System had been receiving this gold. Congressman 
Dunbar questioned Governor W.P.G. Harding of the Federal Reserve Board 
as follows: 

DUNBAR: "In other words, Russia is sending a great deal of gold to the 
European countries, which in turn send it to us? " 

HARDING: "This is done to pay for the stuff bought in this country and to 
create dollar exchange." 

DUNBAR: "At the same time, that gold came from Russia through Europe?" 

HARDING: "Some of it is thought to be Kolchak gold, coming through 
Siberia, but it is none of the Federal Reserve Banks' business. The Secretary 
of the Treasury has issued instructions to the assay office not to take any gold 
which does not bear the mint mark of a friendly nation." 

Just what Governor Harding meant by "a friendly nation" is not clear. In 1921, we 
were not at war with any country, but Congress was already beginning to question 
the international gold dealings of the Federal Reserve System. Governor Harding 
could very well shrug his shoulders and say that it was none of the Federal Reserve 
Banks' business where the gold came from. Gold knows no nationality or race. The 
United States by law had ceased to be interested in where its gold came from in 
1906, when Secretary of the Treasury Shaw made arrangements with several of the 
larger New York banks (ones in which he had interests) to purchase gold with 
advances of cash from the United States Treasury, which would then purchase the 
gold from these banks. The Treasury could claim that it did not know where its gold 
came from since their office only registers the bank from which it made the 
purchase. Since 1906, the Treasury has not known from which of the international 
gold merchants it was buying its gold. 

The international gold dealings of the Federal Reserve System, and its active 
support in helping the League of Nations to force all the nations 

121 



of Europe and South America back on the gold standard for the benefit of 
international gold merchants like Eugene Meyer, Jr. and Albert Strauss, is best 
demonstrated by a classic incident, the sterling credit of 1925. 

J.E. Darling wrote, in the English periodical, "Spectator", on January 10, 1925 that: 

"Obviously, it is of the first importance to the United States to induce England to 
resume the gold standard as early as possible. An American controlled Gold 
Standard, which must inevitably result in the United States becoming the world's 
supreme financial power, makes England a tributary and satellite, and New York 
the world's financial centre." 

Mr. Darling fails to point out that the American people have as little to do with this 
as the British people, and that resumption of the gold standard by Britain would 
benefit only that small group of international gold merchants who own the world's 
gold. No wonder that "Banker's Magazine" gleefully remarked in July, 1925 that: 

"The outstanding event of the past half year in the banking world was the 
restoration of the gold standard." 

The First World War changed the status of the United States from that of a debtor 
nation to the position of the world's greatest creditor nation, a title formerly 
occupied by England. Since debt is money, according to the Governor Marriner 
Eccles of the Federal Reserve Board, this also made us the richest nation of the 
world. The war also caused the removal of the headquarters of the world's 
acceptance market from London to New York, and Paul Warburg became the most 
powerful trade acceptance banker in the world. The mainstay of the international 
financiers, however, remained the same. The gold standard was still the basis of 
foreign exchange, and the small group of internationals who owned the gold 
controlled the monetary system of the Western nations. 

Professor Gustav Cassel wrote in 1928: 

"The American dollar, not the gold standard, is the world's monetary standard. The 
American Federal Reserve Board has the power to determine the purchasing power 
of the dollar by making changes in the rate of discount, and thus controls the 
monetary standard of the world." 

If this were true, the members of the Federal Reserve Board would be the most 
powerful financiers in the world. Occasionally their membership includes such 
influential men as Paul Warburg or Eugene Meyer, Jr., but usually they are a 
rubber-stamp committee for the Federal Advisory Council and the London bankers. 

In May, 1925, the British Parliament passed the Gold Standard Act, putting Great 
Britain back on the gold standard. The Federal Reserve System's major role in this 
event came out on March 16, 1926, when George Seay, Governor of the Federal 
Reserve Bank of Richmond, testified before the House Banking and Currency 
Committee that: 



122 



"A verbal understanding confirmed by correspondence, extended Great Britain a 
two hundred million dollar gold loan or credit. All negotiations were conducted 
between Benjamin Strong, Governor of the Federal Reserve Bank of New York and 
Mr. Montagu Norman, Governor of the Bank of England. The purpose of this loan 
was to help England get back on the gold standard, and the loan was to be met by 
investment of Federal Reserve funds in bills of exchange and foreign securities." 

The Federal Reserve Bulletin of June, 1925, stated that: 

"Under its arrangement with the Bank of England the Federal Reserve Bank of 
New York undertakes to sell gold on credit to the Bank of England from time to 
time during the next two years, but not to exceed $200,000,000 outstanding at any 
one time." 

A two hundred million dollar gold credit had been arranged by a verbal 
understanding between the international bankers, Benjamin Strong and Montagu 
Norman. It was apparent by this time that the Federal Reserve System had other 
interests at heart than the financial needs of American business and industry. Great 
Britain's return to the gold standard was further facilitated by an additional gold 
loan of a hundred million dollars from J.P. Morgan Company. Winston Churchill, 
British Chancellor of the Exchequer, complained later that the cost to the British 
government of this loan was $1,125,000 the first year, this sum representing the 
profit to J.P. Morgan Company in that time. 

The matter of changing the discount rate, for instance, has never been satisfactorily 
explained. Inquiry at the Federal Reserve Board in Washington elicited the reply 
that "the condition of the money market is the prime consideration behind changes 
in the rate. " Since the money market is in New York, it takes no imagination to 
deduce that New York bankers may be interested in changes of the rate and often 
attempt to influence it. 

Norman Lombard, in the periodical "World's Work" writes that: 

"In their consideration and disposal of proposed changes of policy, the Federal 
Reserve Board should follow the procedure and ethics observed by our court of law. 
Suggestions that there should be a change of rate or that the Reserve Banks should 
buy or sell securities may come from anyone and with no formality or written 
argument. The suggestion may be made to a Governor or Director of the Federal 
Reserve System over the telephone or at his club over the luncheon table, or it may 
be made in the course of a casual call on a member of the Federal Reserve Board. 
The interests of the one proposing the change need not be revealed, and his name 
and any suggestions he makes are usually kept secret. If it concerns the matter of 
open market operations, the public has no inkling of the decision until the regular 
weekly statement appears, showing changes in the holdings of the Federal Reserve 
Banks. Meanwhile, there is no public discussion, there is no 

statement of the reasons for the decision, or of the names of those opposing or 
favoring it." 



123 



The chances of the average citizen meeting a Governor of the Federal Reserve 
System at his club are also slight. 

The House Hearings on Stabilization of the Purchasing Power of the Dollar in 1928 
proved conclusively that the Federal Reserve Board worked in close cooperation 
with the heads of European central banks, and that the Depression of 1929-31 was 
planned at a secret luncheon of the Federal Reserve Board and those heads of 
European central banks in 1927. The Board has never been made responsible to the 
public for its decisions or actions. The constitutional checks and balances seem not 
to operate in finance. 

The true allegiance of the members of the Federal Reserve Board has always been to 
the central bankers. The three features of the central bank, its ownership by private 
stockholders who receive rent and profit for their use of the nation's credit, absolute 
control of the nation's financial resources, and mobilization of the nation's credit to 
finance foreigners, all were demonstrated by the Federal Reserve System during the 
first fifteen years of its operations. 

Further demonstration of the international purposes of the Federal Reserve Act of 
1913 is provided by the "Edge Amendment" of December 24, 1919, which 
authorizes the organization of corporations expressly for " engaging in international 
foreign banking and other international or foreign financial operations, including 
the dealing in gold or bullion, and the holding of stock in foreign corporations." In 
commenting on this amendment, E.W. Kemmerer, economist from Princeton 
University, remarked that: 

"The federal reserve system is proving to be a great influence in the 
internationalizing of 

American trade and American finance." 

The fact that this internationalizing of American trade and American finance has 
been a direct cause for involving us in two world wars does not disturb Mr. 
Kemmerer. There is plenty of evidence to show how Paul Warburg used the Federal 
Reserve System as the instrument for getting trade acceptance adopted on a wide 
scale by American businessmen. 

The use of trade acceptances, (which are the currency of international trade) by 
bankers and corporations in the United States prior to 1915 was practically 
unknown. The rise of the Federal Reserve System exactly parallels the increase in 
the use of acceptances in this country, nor is this a coincidence. The men who 
wanted the Federal Reserve System were the men who set up acceptance banks and 
profited by the use of acceptances. 

As early as 1910, the National Monetary Commission began to issue pamphlets and 
other propaganda urging bankers and businessmen in this country to adopt trade 
acceptances in their transactions. For three 



124 



years the Commission carried on this campaign, and the Aldrich Plan 
included a broad provision authorizing the introduction and use of bankers' 
acceptances into the American system of commercial paper. 

The Federal Reserve Act of 1913 as passed by Congress did not specifically 
authorize the use of acceptances, but the Federal Reserve Board in 1915 and 
1916 defined "trade acceptance", further defined by Regulation A Series of 
1920, and further defined by Series 1924. One of the first official acts of the 
Board of Governors in 1914 was to grant acceptances a preferentially low 
rate of discount at Federal Reserve Banks. Since acceptances were not being 
used in this country at that time, no explanation of business exigency could 
be advanced for this action. It was apparent that someone in power on the 
Board of Governors wanted the adoptance of acceptances. 

The National Bank Act of 1864, which was the determining financial 
authority of the United States until November, 1914, did not permit banks to 
lend their credit. Consequently, the power of banks to create money was 
greatly limited. We did not have a bank of issue, that is, a central bank, 
which could create money. To get a central bank, the bankers caused money 
panic after money panic on the business people of the United States, by 
shipping gold out of the country, creating a money shortage, and then 
importing it back. After we got our central bank, the Federal Reserve 
System, there was no longer any need for a money panic, because the banks 
could create money. However, the panic as an instrument of power over the 
business and financial community was used again on two important 
occasions, in 1920, causing the Agricultural Depression, because state banks 
and trust companies had refused to join the Federal Reserve System, and in 
1929, causing the Great Depression, which centralized nearly all power in 
this country in the hands of a few great trusts. 

A trade acceptance is a draft drawn by the seller of goods on the purchaser, 
and accepted by the purchaser, with a time of expiration stamped upon it. 
The use of trade acceptances in the wholesale market supplies short-term, 
assured credit to carry goods in process of production, storage, transit, and 
marketing. It facilitates domestic and foreign commerce. Seemingly, then, the 
bankers who wished to replace the open-book account system with the trade 
acceptance system were progressive men who wished to help American 
import-export trade. Much propaganda was issued to that effect, but this was 
not really the story. 

The open-book system, heretofore used entirely by American business 
people, allowed a discount for cash. The acceptance system discourages the 
use of cash, by allowing a discount for credit. The open-book system also 
allowed much easier terms of payment, with liberal extensions on the debt. 
The acceptance does not allow this, since it is 

125 



a short-term credit with the time-date stamped upon it. It is out of the seller's 
hands, and in the hands of a bank, usually an acceptance bank, which does not allow 
any extension of time. Thus, the adoption of acceptances by American businessmen 
during the 1920's greatly facilitated the domination and swallowing up of small 
business into huge trusts, which accelerated the crash of 1929. 

Trade acceptances had been used to some extent in the United States before the 
Civil War. During that war, exigencies of trade had destroyed the acceptance as a 
credit medium, and it had not come back into favor in this country, our people 
preferring the simplicity and generosity of the open-book system. Open-book 
accounts are a single-name commercial paper, bearing only the name of the debtor. 
Acceptances are two-name paper, bearing the name of the debtor and the creditor. 
Thus they became commodities to be bought and sold by banks. To the creditor, 
under the open-book system, the debt is a liability. To the acceptance bank holding 
an acceptance, the debt is an asset. The men who set up acceptance banks in this 
country, under the leadership of Paul Warburg, secured control of the billions of 
dollars of credit existing as open accounts on the books of American businessmen. 

Governor Marriner Eccles of the Federal Reserve Board stated before the House 
Banking and Currency Committee that: "Debt is the basis for the creation of 
money." 

Large holders of trade acceptances got the use of billions of dollars worth of credit- 
money, besides the rate of interest charged upon the acceptance itself. It is obvious 
why Paul Warburg should have devoted so much time, money, and energy to getting 
acceptances adopted by this country's banking machinery. 

On September 4, 1914, the National City Bank accepted the first time-draft drawn 
on a national bank under provisions of the Federal Reserve Act of 1913. This was 
the beginning of the end of the open-book account system as an important factor in 
wholesale trade. Beverly Harris, vice-president of the National City Bank of New 
York, issued a pamphlet in 1915 stating that: 

"Merchants using the open account system are usurping the functions of bankers." 

In The New York Times on June 14, 1920, Paul Warburg, Chairman of the 
American Acceptance Council, said: 

"Unless the Federal Reserve Board puts itself heart and soul behind the 
untrammeled development of acceptances as a prime investment for banks of the 
Federal Reserve Banks the future safe and sound development of the system will be 
jeopardized." 

This was a statement of the purpose of Warburg and his bunch who wanted 
"monetary reform" in this country. They were out to get control 



126 



of all credit in the United States, and they got it, by means of the Federal Reserve 
System, the acceptance system, and the lack of concern by the citizens. 

The First World War was a boon to the introduction of trade acceptances, and the 
volume jumped to four hundred million dollars in 1917, growing through the 1920s 
to more than a billion dollars a year, which culminated in a high peak just before 
the Great Depression of 1929-31. The Federal Reserve Bank of New York's charts 
show that its use of acceptances reached a peak in November, 1929, the month of the 
stock market crash, and declined sharply thereafter. The acceptance people by then 
had gotten what they wanted, which was control of American business and industry. 
"Fortune Magazine" in February of 1950 pointed out that: 

"Volume of acceptances declined from $1,732 million in 1929 to $209 million in 
1940, because 

of the concentration of acceptance banking in a few hands, and the Treasury's low- 
interest 

policy, which made direct loans cheaper than acceptance. There has been a slight 
upturn since the war, but it is often cheaper for large companies to finance imports 
from their own coffers. " 

In other words, the "large companies" more accurately, the great trusts, now have 
control of credit and have not needed acceptances. Besides the barrage of 
propaganda issued by the Federal Reserve System itself, the National Association of 
Credit Men, the American Bankers' Association, and other fraternal organizations 
of the New York bankers devoted much time and money to distributing acceptance 
propaganda. Even their flood of lectures and pamphlets proved insufficient, and in 
1919 Paul Warburg organized the American Acceptance Council, which was 
devoted entirely to acceptance propaganda. 

The first convention held by this association at Detroit, Michigan, on June 9, 1919, 
coincided with the annual convention of the National Association of Credit Men, 
held there on that date, so that "interested observers might with facility participate 
in the lectures and meetings of both groups," according to a pamphlet issued by the 
American Acceptance Council. 

Paul Warburg was elected President of this organization, and later became 
chairman of the Executive Committee of the American Acceptance Council, a 
position which he held until his death in 1932. The Council published lists of 
corporations using trade acceptances, all of them businesses in which Kuhn, Loeb 
Co. or its affiliates held control. Lectures given before the Council or by members of 
the Council were attractively bound and distributed free by the National City Bank 
of New York to the country's businessmen. Louis T. McFadden, Chairman of the 
House Banking and Currency Committee, charged in 1922 that the American 
Acceptance Council was 



127 



exercising undue influence on the Federal Reserve Board and called for a 
Congressional investigation, but Congress was not interested. 

At the second annual convention of the American Acceptance Council, held 
in New York on December 2, 1920, President Paul Warburg stated: 

"It is a great satisfaction to report that during the year under review it was 
possible for the American Acceptance Council to further develop and 
strengthen its relations with the Federal Reserve Board." 

During the 1920s Paul Warburg, who had resigned from the Federal Reserve 
Board after holding a position as Governor for a year in wartime, continued 
to exercise direct personal influence on the Federal Reserve Board by 
meeting with the Board as President of the Federal Advisory Council and as 
President of the American Acceptance Council. He was, from its organization 
in 1920 until his death in 1932, Chairman of the Board of the International 
Acceptance Bank of New York, the largest acceptance bank in the world. His 
brother, Felix M. Warburg, also a partner in Kuhn, Loeb Co., was director 
of the International Acceptance Bank and Paul's son, James Paul Warburg, 
was Vice-President. Paul Warburg was also a director on other important 
acceptance banks in this country, such as Westinghouse Acceptance Bank, 
which were organized in the United States immediately after the World War, 
when the headquarters of the international acceptance market was moved 
from London to New York, and Paul Warburg became the most powerful 
acceptance banker in the world. 

Paul Warburg became an even more legendary figure by his memorialization 
as "Daddy Warbucks" in the comic strip, "Little Orphan Annie". The strip 
celebrated a homeless waif and her dog who are adopted by "the richest man 
in the world", Daddy Warbucks, a takeoff on "Warburg", who has almost 
magical powers and can accomplish anything by the power of his limitless 
wealth. Those in the know snickered when "Annie", the musical comedy 
version of this story, had a highly successful run of several years on 
Broadway, because the vast majority of the audience had no idea that this 
was merely another Warburg operation. 

It was the transference of the acceptance market from England to this 
country which gave rise to Thomas Lamont's ecstatic speech before the 
Academy of Political Science in 1917 that: 

"The dollar, not the pound, is now the basis for international exchange." 

Americans were proud to hear that, but they did not realize at what a price. 

Visible proof of the undue influence of the American Acceptance Council on 
the Federal Reserve Board, about which Congressman McFadden 
complained, is the chart showing the rate-pattern of the 

128 



Federal Reserve Bank of New York during the 1920s. The Bank's official 
discount rate follows exactly for nine years the ninety-day bankers' 
acceptance rate, and the Federal Reserve Bank of New York sets the discount 
rate for the rest of the Reserve Banks. 

Throughout the 1920s the Board of Governors retained two of its first 
members, C.S. Hamlin and Adolph C. Miller. These men found themselves 
careers as arbiters of the nation's monetary policy. Hamlin was on the Board 
from 1914 until 1936, when he was appointed Special Counsel to the Board, 
while Miller served from 1914 until 1931. These two men were allowed to 
stay on the Board so many years because they were both eminently 
respectable men who gave the Board a certain prestige in the eyes of the 
public. During these years one important banker after another came on the 
Board, served for awhile, and went on to better things. Neither Miller nor 
Hamlin ever objected to anything that the New York bankers wanted. They 
changed the discount rate and they performed open market operation with 
Government securities whenever Wall Street wanted them to. Behind them 
was the figure of Paul Warburg, who exercised a continuous and dominant 
influence as President of the Federal Advisory Council, on which he had such 
men of common interests with himself as Winthrop Aldrich and J.P. Morgan. 
Warburg was never too occupied with his duties of organizing the big 
international trusts to supervise the nation's financial structures. His 
influence from 1902, when he arrived in this country as immigrant from 
Germany, until 1932, the year of his death, was dependent on his European 
alliance with the banking cartel. Warburg's son, James Paul Warburg, 
continued to exercise such influence, being appointed Franklin D. Roosevelt's 
Director of the Budget when that great man assumed office in 1933, and 
setting up the Office of War Information, our official propaganda agency 
during the Second World War. 

In The Fight for Financial Supremacy, Paul Einzig, editorial writer for the 
London Economist, wrote that: 

"Almost immediately after World War I a close cooperation was established 
between the Bank of England and the Federal Reserve authorities, and more 
especially with the Federal Reserve Bank of New York.* This cooperation 
was largely due to the cordial relations existing between Mr. Montagu 
Norman of the Bank of England and Mr. Benjamin Strong, Governor of the 
Federal Reserve Bank of New York until 1928. On several occasions the 
discount rate policy of the Federal Reserve Bank of New York was guided by 
a desire to help the Bank of England. 



* William Boyce Thompson (Wall Street operator) commented to Clarence Barron, Nov. 27, 
1920, "Why should the Federal Reserve Bank have private wires all over the country and 
talk daily by cable with the Bank of England?" p. 327 "They Told Barron". 

129 



There has been close cooperation in the fixing of discount rates between 
London and New York. "86 



86 Paul Einzig, The Fight For Financial Supremacy, Macmillan, 1931 



130 



CHAPTER ELEVEN 

Lord Montagu Norman 



The collaboration between Benjamin Strong and Lord Montagu Norman is 
one of the greatest secrets of the twentieth century. Benjamin Strong married 
the daughter of the president of Bankers Trust in New York, and 
subsequently succeeded to its presidency. Carroll Quigley, in Tragedy and 
Hope says: "Strong became Governor of the Federal Reserve Bank of New 
York as the joint nominee of Morgan and of Kuhn, Loeb Company in 
1914."87 

Lord Montagu Norman is the only man in history who had both his maternal 
grandfather and his paternal grandfather serve as Governors of the Bank of 
England. His father was with Brown, Shipley Company, the London Branch 
of Brown Brothers (now Brown Brothers Harriman). Montagu Norman 
(1871-1950) came to New York to work for Brown Brothers in 1894, where 
he was befriended by the Delano family, and by James Markoe, of Brown 
Brothers. He returned to England, and in 1907 was named to the Court of 
the Bank of England. In 1912, he had a nervous breakdown, and went to 
Switzerland to be treated by Jung, as was fashionable among the powerful 
group which he represented.* 

Lord Montagu Norman was Governor of the Bank of England from 1916 to 
1944. During this period, he participated in the central bank conferences 
which set up the Crash of 1929 and a worldwide depression. In The Politics 
of Money by Brian Johnson, he writes, " Strong and Norman, intimate 
friends, spent their holidays together at Bar Harbour and in the South of 

France." Johnson says, "Norman therefore became Strong's alter ego 

"Strong's easy money policies on the New York money market from 1925-28 
were the fulfillment of his agreement with Norman to keep New York 
interest rates below those of London. For the sake of international 
cooperation, Strong withheld the steadying hand of high interest rates from 
New York until it was too late. Easy money in New 



87 Carroll Quigley, Tragedy and Hope, Macmillan, New York, p. 326 

* When people of this class are stricken by guilt feelings while plotting world 
wars and economic depressions which will bring misery, suffering and death 
to millions of the world's inhabitants, they sometimes have qualms. These 
qualms are jeered at by their peers as "a failure of nerve". After a bout with 
their psychiatrists, they return to their work with renewed gusto, with no 
further digressions of pity for "the little people" who are to be their victims. 

131 



York had encouraged the surging American boom of the late 1920s, with its 
fantastic heights of speculation. "88 

Benjamin Strong died suddenly in 1928. The New York Times obituary, Oct. 17, 
1928, describes the conference between the directors of the three great central banks 
in Europe in July, 1927, "Mr. Norman, Bank of England, Strong of the New York 
Federal Reserve Bank, and Dr. Hjalmar Schacht of the Reichsbank, their meeting 
referred to at the time as a meeting of 'the world's most exclusive club'. No public 
reports were ever made of the foreign conferences, which were wholly informal, but 
which covered many important questions of gold movements, the stability of world 
trade, and world economy. " 

The meetings at which the future of the world's economy are decided are always 
reported as being "wholly informal", off the record, no reports made to the public, 
and on the rare occasions when outraged Congressmen summon these mystery 
figures to testify about their activities they merely trace the outline of steps taken, 
and develop no information about what was really said or decided. 

At the Senate Hearings on the Federal Reserve System in 1931, H. Parker Willis, 
one of the authors and First Secretary of the Federal Reserve Board from 1914 until 
1920, pointedly asked Governor George Harrison, Strong's successor as Governor 
of the Federal Reserve Bank of New York: 

"What is the relationship between the Federal Reserve Bank of New York and the 
money committee of the Stock Exchange? " 

"There is no relationship," Governor Harrison replied. 

"There is no assistance or cooperation in fixing the rate in any way?", asked Willis. 

"No," said Governor Harrison, "although on various occasions they advise us of the 
state of the money situation, and what they think the rate ought to be." This was an 
absolute contradiction of his statement that "There is no relationship". The Federal 
Reserve Bank of New York which set the discount rate for the other Reserve Banks, 
actually maintained a close liaison with the money committee of the Stock 
Exchange. 

The House Stabilization Hearings of 1928 proved conclusively that the Governors of 
the Federal Reserve System had been holding conferences with heads of the big 
European central banks. Even had the Congressmen known the details of the plot 
which was to culminate in the Great Depression of 1929-31, there would have been 
nothing they could have done to stop it. The international bankers who controlled 
gold movements could inflict their will on any country, and the United States was as 
helpless as any other. 

Notes from these House Hearings follow: 



88 Brian Johnson, The Politics of Money, McGraw Hill, New York, 1970, p. 
63. 



132 



MR. BEEDY: "I notice on your chart that the lines which produce the most 
violent fluctuations are found under 'Money Rates in New York.' As the 
rates of money rise and fall in the big cities the loans that are made on 
investments seem to take advantage of them, at present, a quite violent 
change, while industry in general does not seem to avail itself of these violent 
changes, and that line is fairly even, there being no great rises or declines. 

GOVERNOR ADOLPH MILLER: This was all more or less in the interests 
of the international situation. They sold gold credits in New York for sterling 
balances in London. 

REPRESENTATIVE STRONG: (No relation to Benjamin): Has the Federal 
Reserve Board the power to attract gold to this country? 

E.A. GOLDENWEISER, research director for the Board: The Federal 
Reserve Board could attract gold to this country by making money rates 
higher. 

GOVERNOR ADOLPH MILLER: I think we are very close to the point 
where any further solicitude on our part for the monetary concerns of 
Europe can be altered. The Federal Reserve Board last summer, 1927, set out 
by a policy of open market purchases, followed in course by reduction on the 
discount rate at the Reserve Banks, to ease the credit situation and to 
cheapen the cost of money. The official reasons for that departure in credit 
policy were that it would help to stabilize international exchange and 
stimulate the exportation of gold. 

CHAIRMAN MCFADDEN: Will you tell us briefly how that matter was brought to 
the Federal Reserve Board and what were the influences that went into the final 
determination? 

GOVERNOR ADOLPH MILLER: You are asking a question impossible for me to 
answer. 

CHAIRMAN MCFADDEN: Perhaps I can clarify it-where did the suggestion come 
from that caused this decision of the change of rates last summer? 

GOVERNOR ADOLPH MILLER: The three largest central banks in Europe had 
sent representatives to this country. There were the Governor of the Bank of 
England, Mr. Hjalmar Schacht, and Professor Rist, Deputy Governor of the Bank of 
France. These gentlemen were in conference with officials of the Federal Reserve 
Bank of New York. After a week or two, they appeared in Washington for the better 
part of a day. They came down the evening of one day and were the guests of the 
Governors of the Federal Reserve Board the following day, and left that afternoon 
for New York. 

CHAIRMAN MCFADDEN: Were the members of the Board present at this 
luncheon? 

133 



GOVERNOR ADOLPH MILLER: Oh, yes, it was given by the Governors of the 
Board for the purpose of bringing all of us together. 

CHAIRMAN MCFADDEN: Was it a social affair, or were matters of importance 
discussed? 

GOVERNOR MILLER: I would say it was mainly a social affair. Personally, I had 
a long conversation with Dr. Schacht alone before the luncheon, and also one of 
considerable length with Professor Rist. After the luncheon I began a conversation 
with Mr. Norman, which was joined in by Governor Strong of New York. 

CHAIRMAN MCFADDEN: Was that a formal meeting of the Board? 

GOVERNOR ADOLPH MILLER: No. 

CHAIRMAN MCFADDEN: It was just an informal discussion of the matters they 
had been discussing in New York? 

GOVERNOR MILLER: I assume so. It was mainly a social occasion. What I said 
was mainly in the nature of generalities. The heads of these central banks also spoke 
in generalities. 

MR. KING: What did they want? 

GOVERNOR MILLER: They were very candid in answers to questions. I wanted to 
have a talk with Mr. Norman, and we both stayed behind after luncheon, and were 
joined by the other foreign representatives and the officials of the New York 
Reserve Bank. These gentlemen were all pretty concerned with the way the gold 
standard was working. They were therefore desirous of seeing an easy money 
market in New York and lower rates, which would deter gold from moving from 
Europe to this country. That would be very much in the interest of the international 
money situation which then existed. 

MR. BEEDY: Was there some understanding arrived at between the 
representatives of these foreign banks and the Federal Reserve Board or the New 
York Federal Reserve Bank? 

GOVERNOR MILLER: Yes. 

MR. BEEDY: It was not reported formally? 

GOVERNOR MILLER: No. Later, there came a meeting of the Open-Market 
Policy Committee, the investment policy committee of the Federal Reserve System, 
by which and to which certain recommendations were made. My recollection is that 
about eighty million dollars worth of securities were purchased in August consistent 
with this plan. 

CHAIRMAN MCFADDEN: Was there any conference between the members of the 
Open Market Committee and those bankers from abroad? 

GOVERNOR MILLER: They may have met them as individuals, but not as a 
committee. 

134 



MR. KING: How does the Open-Market Committee get its ideas? 

GOVERNOR MILLER: They sit around and talk about it. I do not know whose 
idea this was. It was distinctly a time in which there was a cooperative spirit at 
work. 

CHAIRMAN MCFADDEN: You have outlined here negotiations of very great 
importance. 

GOVERNOR MILLER: I should rather say conversations. 

CHAIRMAN MCFADDEN: Something of a very definite character took place? 

GOVERNOR MILLER: Yes. 

CHAIRMAN MCFADDEN: A change of policy on the part of our whole financial 
system which has resulted in one of the most unusual situations that has ever 
confronted this country financially (the stock market speculation boom of 1927- 
1929). It seems to me that a matter of that importance should have been made a 
matter of record in Washington. 

GOVERNOR MILLER: I agree with you. 

REPRESENTATIVE STRONG: Would it not have been a good thing if there had 
been a direction that those powers given to the Federal Reserve System should be 
used for the continued stabilization of the purchasing power of the American dollar 
rather than be influenced by the interests of Europe? 

GOVERNOR MILLER: I take exception to that term "influence". Besides, there is 
no such thing as stabilizing the American dollar without stabilizing every other gold 
currency. They are tied together by the gold standard. Other eminent men who 
come here are very adroit in knowing how to approach the folk who make up the 
personnel of the Federal Reserve Board. 

MR. STEAGALL: The visit of these foreign bankers resulted in money being 
cheaper in New York? 

GOVERNOR MILLER: Yes, exactly. 

CHAIRMAN MCFADDEN: I would like to put in the record all who attended that 
luncheon in Washington. 

GOVERNOR MILLER: In addition to the names I have given you, there was also 
present one of the younger men from the Bank of France. I think all members of the 
Federal Reserve Board were there. Under Secretary of the Treasury Ogden Mills 
was there, and the Assistant Secretary of the Treasury, Mr. Schuneman, also, two or 
three men from the State Department and Mr. Warren of the Foreign Department 
of the Federal Reserve Bank of New York. Oh yes, Governor Strong was present. 



135 



CHAIRMAN MCFADDEN: This conference, of course, with all of these foreign 
bankers did not just happen. The prominent bankers from Germany, France, and 
England came here at whose suggestion? 

GOVERNOR MILLER: A situation had been created that was distinctly 
embarrassing to London by reason of the impending withdrawal of a certain 
amount of gold which had been recovered by France and that had originally been 
shipped and deposited in the Bank of England by the French Government as a war 
credit. There was getting to be some tension of mind in Europe because France was 
beginning to put her house in order for a return to the gold standard. This situation 
was one which called for some moderating influence. 

MR. KING: Who was the moving spirit who got those people together? 

GOVERNOR MILLER: That is a detail with which I am not familiar. 

REPRESENTATIVE STRONG: Would it not be fair to say that the fellows who 
wanted the gold were the ones who instigated the meeting? 

GOVERNOR MILLER: They came over here. 

REPRESENTATIVE STRONG: The fact is that they came over here, they had a 
meeting, they banqueted, they talked, they got the Federal Reserve Board to lower 
the discount rate, and to make the purchases in the open market, and they got the 
gold. 

MR. STEAGALL: Is it true that action stabilized the European currencies and 
upset ours? 

GOVERNOR MILLER: Yes, that was what it was intended to do. 

CHAIRMAN MCFADDEN: Let me call your attention to the recent conference in 
Paris at which Mr. Goldenweiser, director of research for the Federal Reserve 
Board, and Dr. Burgess, assistant Federal Reserve Agent of the Federal Reserve 
Bank of New York, were in consultation with the representatives of the other central 
banks. Who called the conference? 

GOVERNOR MILLER: My recollection is that it was called by the Bank of France. 

GOVERNOR YOUNG: No, it was the League of Nations who called them together." 

The secret meeting between the Governors of the Federal Reserve Board and the 
heads of the European central banks was not called to stabilize anything. It was held 
to discuss the best way of getting the gold held in the United States by the System 
back to Europe to force the nations of that continent back on the gold standard. The 
League of Nations had not yet succeeded in doing that, the objective for which that 
body was set up in the first place, because the Senate of the United States 



136 



had refused to let Woodrow Wilson betray us to an international monetary 
authority. It took the Second World War and Franklin D. Roosevelt to do that. 
Meanwhile, Europe had to have our gold and the Federal Reserve System gave it to 
them, five hundred million dollars worth. The movement of that gold out of the 
United States caused the deflation of the stock boom, the end of the business 
prosperity of the 1920s and the Great Depression of 1929-31, the worst calamity 
which has ever befallen this nation. It is entirely logical to say that the American 
people suffered that depression as a punishment for not joining the League of 
Nations. The bankers knew what would happen when that five hundred million 
dollars worth of gold was sent to Europe. They wanted the Depression because it put 
the business and finance of the United States in their hands. 

The Hearings continue: 

MR. BEEDY: "Mr. Ebersole of the Treasury Department concluded his remarks at 
the dinner we attended last night by saying that the Federal Reserve System did not 
want stabilization and the American businessman did not want it. They want these 
fluctuations in prices, not only in securities but in commodities, in trade generally, 
because those who are now in control are making their profits out of that very 
instability. If control of these people does not come in a legitimate way, there may be 
an attempt to produce it by general upheavals such as have characterized society in 
days gone by. Revolutions have been promoted by dissatisfaction with existing 
conditions, the control being in the hands of the few, and the many paying the bills. 

CHAIRMAN MCFADDEN: I have here a letter from a member of the Federal 
Reserve Board who was summoned to appear here. I would like to have it put in the 
record. It is from Governor Cunningham: 

Dear Mr. Chairman: 

For the past several weeks I have been confined to my home on account of illness 
and am now preparing to spend a few weeks away from Washington for the purpose 
of hastening convalescence. 

Edward H. Cunningham 

This is in answer to an invitation extended him to appear before our Committee. I 
also have a letter from George Harrison, Deputy Governor of the Federal Reserve 
Bank of New York. 

My dear Mr. Congressman: 

Governor Strong sailed for Europe last week. He had not been at all well since the 
first of the year, and, while he did appear before your Committee last March, it was 
only shortly after that 

that he suffered a very severe attack of shingles, which has sorely racked his nerves. 

George L. Harrison, May 19, 1928 



137 



I also desire to place in the record a statement in the New York Journal of 
Commerce, dated May 22, 1928, from Washington: 

'It is stated in well-informed circles here that the chief topic being taken up by 
Governor Strong of the Federal Reserve Bank of New York on his present visit to 
Paris is the arrangement of stabilization credits for France, Rumania, and 
Yugoslavia. A second vital question Mr. Strong will take up is the amount of gold 
France is to draw from this country.'" 

Further questioning by Chairman McFadden about the strange illness of Benjamin 
Strong brought forth the following testimony from Governor Charles S. Hamlin of 
the Federal Reserve Board on May 23rd, 1928: 

"All I know is that Governor Strong has been very ill, and he has gone over to 
Europe primarily, I understand, as a matter of health. Of course, he knows well the 
various offices of the European central banks and undoubtedly will call on them." 

Governor Benjamin Strong died a few weeks after his return from Europe, without 
appearing before the Committee. 

The purpose of these hearings before the House Committee on Banking and 
Currency in 1928 was to investigate the necessity for passing the Strong bill, 
presented by Representative Strong (no relation to Benjamin, the 
international banker), which would have provided that the Federal Reserve 
System be empowered to act to stabilize the purchasing power of the dollar. 
This had been one of the promises made by Carter Glass and Woodrow 
Wilson when they presented the Federal Reserve Act before Congress in 
1912, and such a provision had actually been put in the Act by Senator 
Robert L. Owen, but Carter Glass' House Committee on Banking and 
Currency had struck it out. The traders and speculators did not want the 
dollar to become stable, because they would no longer be able to make a 
profit. The citizens of this country had been led to gamble on the stock 
market in the 1920s because the traders had created a nationwide condition 
of instability. 

The Strong Bill of 1928 was defeated in Congress. 

The financial situation in the United States during the 1920s was characterized by 
an inflation of speculative values only. It was a trader-made situation. Prices of 
commodities remained low, despite the over-pricing of securities on the exchange. 

The purchasers did not expect their securities to pay dividends. The idea was to hold 
them awhile and sell them at a profit. It had to stop somewhere, as Paul Warburg 
remarked in March, 1929. Wall Street did not let it stop until the people had put 
their savings into these over-priced securities. We had the spectacle of the President 
of the United States, Calvin Coolidge, acting as a shill for the stock market 
operators when he recommended to the American people that they continue buying 
on the 

138 



market, in 1927. There had been uneasiness about the inflated condition of the 
market, and the bankers showed their power by getting the President of the United 
States, the Secretary of the Treasury, and the Chairman of the Board of Governors 
of the Federal Reserve System to issue statements that brokers' loans were not too 
high, and that the condition of the stock market was sound. 

Irving Fisher warned us in 1927 that the burden of stabilizing prices all over the 
world would soon fall on the United States. One of the results of the Second World 
War was the establishment of an International Monetary Fund to do just that. 
Professor Gustav Cassel remarked in the same year that: 

"The downward movement of prices has not been a spontaneous result of forces 
beyond our 

control. It is the result of a policy deliberately framed to bring down prices and give 
a higher value to the monetary unit." 

The Democratic Party, after passing the Federal Reserve Act and leading us into the 
First World War, assumed the role of an opposition party during the 1920s. They 
were on the outside of the political fence, and were supported during those lean 
years by liberal handouts from Bernard Baruch, according to his biography. How 
far outside of it they were and how little chance they had in 1928, is shown by a 
plank in the official Democratic Party platform adopted at Houston on June 28, 
1928: 

"The administration of the Federal Reserve System for the advantage of the stock- 
market speculators should cease. It must be administered for the benefit of farmers, 
wage-earners, merchants, manufacturers, and others engaged in constructive 
business. " 

This idealism insured defeat for its protagonist, Al Smith, who was nominated by 
Franklin D. Roosevelt. The campaign against AI Smith also was marked by appeals 
to religious intolerance, because he was a Catholic. The bankers stirred up anti- 
Catholic sentiment all over the country to achieve the election of their World War I 
protege, Herbert Hoover. 

Instead of being used to promote the financial stability of the country, as had been 
promised by Woodrow Wilson when the Act was passed, financial instability has 
been steadily promoted by the Federal Reserve Board. An official memorandum 
issued by the Board on March 13, 1939, stated that: 

"The Board of Governors of the Federal Reserve System opposes any bill which 
proposes a stable price level." 

Politically, the Federal Reserve Board was used to advance the election of the 
bankers' candidates during the 1920s. The "Literary Digest" on August 4, 1928, 
said, on the occasion of the Federal Reserve Board raising the rate to five percent in 
a Presidential year: 



139 



"This reverses the politically desirable cheap money policy of 1927, and gives 
smooth conditions on the stock market. It was attacked by the Peoples' Lobby of 
Washington, D.C. which said that 'This increase at a time when farmers needed 
cheap money to finance the harvesting of their crops was a direct blow at the 
farmers, who had begun to get back on their feet after the Agricultural Depression 
of 1920-21. 

"The New York World" said on that occasion: 

"Criticism of Federal Reserve Board policy by many investors is not based on its 
attempt to deflate the stock market, but on the charge that the Board itself, by last 
year's policy, is completely responsible for such stock market inflation as exists." 

A damning survey of the Federal Reserve System's first fifteen years appears in the 
"North American Review" of May, 1929, by H. Parker Willis, professional 
economist who was one of the authors of the Act and First Secretary of the Board 
from 1914 until 1920. He expresses complete disillusionment. 

"My first talk with President-elect Wilson was in 1912. Our conversation related 
entirely to banking reform. I asked whether he felt confident we could secure the 
administration of a suitable law and how we should get it applied and enforced. He 
answered: 'We must rely on American business idealism.' He sought for something 
which could be trusted to afford opportunity to American Idealism. It did serve to 
finance the World War and to revise American banking practices. The element of 
idealism that the President prescribed and believed we could get on the principle of 
noblesse oblige from American bankers and businessmen was not there. 

Since the inauguration of the Federal Reserve Act we have suffered one of the most 
serious financial depressions and revolutions ever known in our history, that of 
1920-21. We have seen our agriculture pass through a long period of suffering and 
even of revolution, during which one million farmers left their farms, due to 
difficulties with the price of land and the odd status of 

credit conditions. We have suffered the most extensive era of bank failures ever 
known in this country. Forty-five hundred banks have closed their doors since the 
Reserve System began functioning. In some Western towns there have been times 
when all banks in that community failed, and given banks have failed over and over 
again. There has been little difference in liability to failure between members and 
non-members of the Federal Reserve System. 

"Wilson's choice of the first members of the Federal Reserve Board was not 
especially happy. 

They represented a composite group chosen for the express purpose of placating 
this, that, or the other big interest. It was not strange that appointees used their 
places to pay debts. When the Board was considering a resolution to the effect that 
future members of the reserve system should be appointed solely on merit, because 
of the demonstrated incompetence of some of their number. 

Comptroller John Skelton Williams moved to strike out the word 'solely' and in this 
he was sustained by the Board. The inclusion of certain elements (Warburg, 

140 



Strauss, etc.) in the Board gave an opportunity for catering to special interests that 
was to prove disastrous later on. 

"President Wilson erred, as he often erred, in supposing that the holding of an 
important office would transform an incumbent and revivify his patriotism. The 
Reserve Board reached the low ebb of the Wilson period with the appointment of a 
member who was chosen for his ability to get delegates for a Democratic candidate 
for the Presidency. However, this level was not the dregs reached under President 
Harding. He appointed an old crony, D.R. Crissinger, as Governor of the Board, 
and named several other super-serviceable politicians to other places. Before his 
death he had done his utmost to debauch the whole undertaking. The System has 
gone steadily downhill ever since. 

"Reserve Banks had hardly assumed their first form when it became apparent that 
local bankers had sought to use them as a means of taking care of 'favorite sons', 
that is, persons who had by common consent become a kind of general charge upon 
the banking community, or inefficient of various kinds. When reserve directors 
were to be chosen, the country bankers often refused to vote, or, when they voted, 
cast their ballots as directed by city correspondents. In these circumstances popular 
or democratic control of reserve banks was out of the question. Reasonable 
efficiency might have been secured if honest men, recognizing their public duty, had 
assumed power. If such men existed, they did not get on the Federal Reserve Board. 
In one reserve bank today the chief management is in the hands of a man who never 
did a day's actual banking in his life, while in another reserve institution both 
Governor and Chairman are the former heads of now defunct banks. They 
naturally have a high failure record in their district. In a majority of districts the 
standard of performance as judged by good banking standards is disgracefully low 
among reserve executive officials. The policy of the Federal Reserve Bank of 
Philadelphia is known in the System as the 'Friends and Relatives Banks.' 

"It was while making war profits in considerable amounts that someone conceived 
the idea of using the profits to provide themselves with phenomenally costly 
buildings. Today the Reserve Banks must keep a full billion dollars of their money 
constantly at work merely to pay their own expenses in normal times. 

"The best illustration of what the System has done and not done is offered by the 
experience which the country was having with speculation, in May, 1929. Three 
years prior to that, the present bull market was just getting under way. In the 
autumn of 1926 a group of bankers, among them one of world famous name, were 
sitting at a table in a Washington hotel. One of them raised the question whether the 
low discount rates of the System were not likely to encourage speculation. 

"'Yes', replied the famous banker, 'they will, but that cannot be helped. It is the 
price we must pay for helping Europe.' 

"It may well be questioned whether the encouragement of speculation by the Board 
has been the price paid for helping Europe or whether 



141 



it is the price paid to induce a certain class of financiers to help Europe, but 
in either case European conditions should not have had anything to do with 
the Board's discount policy. The fact of the matter is that the Federal 
Reserve Banks do not come into contact with the community. 

"The 'small man' from Maine to Texas has gradually been led to invest his 
savings in the stock market, with the result that the rising tide of 
speculation, transacted at a higher and higher rate of speed, has swept over 
the legitimate business of the country. 

"In March, 1928, Roy A. Young, Governor of the Board, was called before a 
Senate committee. 

'Do you think the brokers' loans are too high?", he was asked. 

"T am not prepared to say whether brokers' loans are too high or too low,' 
he replied, 'but I am sure they are safely and conservatively made.' 

"Secretary of the Treasury Mellon in a formal statement assured the country 
that they were not too high, and Coolidge, using material supplied him by the 
Federal Reserve Board, made a plain statement to the country that they were 
not too high. The Federal Reserve Board, charged with the duty of protecting 
the interests of the average man, thus did its utmost to assure the average 
man that he should feel no alarm about his savings. Yet the Federal Reserve 
Board issued on February 2, 1929, a letter addressed to the Reserve Bank 
Directors cautioning them against grave danger of further speculation. 

"What could be expected from a group of men such as composed the Board, 
a set of men who were solely interested in standing from under when there 
was any danger of friction, displaying a bovine and canine appetite for credit 
and praise, while eager only to 'stand in' with the 'big men' whom they know 
as the masters of American finance and banking? " 

H. Parker Willis omitted any reference to Lord Montague Norman and the 
machinations of the Bank of England which were about to result in the Crash 
of 1929 and the Great Depression. 



142 



CHAPTER TWELVE 

The Great Depression 



R.G. Hawtrey, the English economist, said, in the March, 1926 American 
Economic Review: 

"When external investment outstrips the supply of general savings the 
investment market must carry the excess with money borrowed from the 
banks. A remedy is control of credit by a rise in bank rate. " 

The Federal Reserve Board applied this control of credit, but not in 1926, 
nor as a remedial measure. It was not applied until 1929, and then the rate 
was raised as a punitive measure, to freeze out everybody but the big trusts. 

Professor Cassel, in the Quarterly Journal of Economics, August 1928, wrote 
that: 

"The fact that a central bank fails to raise its bank rate in accordance with 
the actual situation of the capital market very much increases the strength of 
the cyclical movement of trade, with all its pernicious effects on social 
economy. A rational regulation of the bank rate lies in our hands, and may 
be accomplished only if we perceive its importance and decide to go in for 
such a policy. 

With a bank rate regulated on these lines the conditions for the development 
of trade cycles would be radically altered, and indeed, our familiar trade 
cycles would be a thing of the past." 

This is the most authoritative premise yet made relating that our business 
depressions are artificially precipitated. The occurrence of the Panic of 1907, 
the Agricultural Depression of 1920, and the Great Depression of 1929, all 
three in good crop years and in periods of national prosperity, suggests that 
premise is not guesswork. Lord Maynard Keynes pointed out that most 
theories of the business cycle failed to relate their analysis adequately to the 
money mechanism. Any survey or study of a depression which failed to list 
such factors as gold movements and pressures on foreign exchange would be 
worthless, yet American economists have always dodged this issue. 

The League of Nations had achieved its goal of getting the nations of Europe 
back on the gold standard by 1928, but three-fourths of the world's gold was 
in France and the United States. The problem was how to get that gold to 
countries which needed it as a basis for money and credit. The answer was 
action by the Federal Reserve System. 

143 



Following the secret meeting of the Federal Reserve Board and the heads of the 
foreign central banks in 1927, the Federal Reserve Banks in a few months doubled 
their holdings of Government securities and acceptances, which resulted in the 
exportation of five hundred million dollars in gold in that year. The System's 
market activities forced the rates of call money down on the Stock Exchange, and 
forced gold out of the country. Foreigners also took this opportunity to purchase 
heavily in Government securities because of the low call money rate. 

"The agreement between the Bank of England and the Washington Federal Reserve 
authorities many months ago was that we would force the export of 725 million of 
gold by reducing the bank rates here, thus helping the stabilization of France and 
Europe and putting France on a gold basis. "89 (April 20, 1928) 

On February 6, 1929, Mr. Montagu Norman, Governor of the Bank of England, 
came to Washington and had a conference with Andrew Mellon, Secretary of the 
Treasury. Immediately after that mysterious visit, the Federal Reserve Board 
abruptly changed its policy and pursued a high discount rate policy, abandoning the 
cheap money policy which it had inaugurated in 1927 after Mr. Norman's other 
visit. The stock market crash and the deflation of the American people's financial 
structure was scheduled to take place in March. To get the ball rolling, Paul 
Warburg gave the official warning to the traders to get out of the market. In his 
annual report to the stockholders of his International Acceptance Bank, in March, 
1929, Mr. Warburg said: 

"If the orgies of unrestrained speculation are permitted to spread, the ultimate 
collapse is certain not only to affect the speculators themselves, but to bring about a 
general depression involving the entire country." 

During three years of "unrestrained speculation", Mr. Warburg had not seen fit to 
make any remarks about the condition of the Stock Exchange. A friendly organ, 
The New York Times, not only gave the report two columns on its editorial page, 
but editorially commented on the wisdom and profundity of Mr. Warburg's 
observations. Mr. Warburg's concern was genuine, for the stock market bubble had 
gone much farther than it had been intended to go, and the bankers feared the 
consequences if the people realized what was going on. When this report in The New 
York Times started a sudden wave of selling on the Exchange, the bankers grew 
panicky, and it was decided to ease the market somewhat. Accordingly, Warburg's 
National City Bank rushed twenty-five million dollars in cash to the call money 
market, and postponed the day of the crash. 

The revelation of the Federal Reserve Board's final decision to trigger the Crash of 
1929 appears, amazingly enough, in The New York Times. On April 20, 1929, the 
Times headlined, "Federal Advisory Council Mystery 



89 Clarence W. Barron, They Told Barron, Harpers, New York, 1930, p. 353 



144 



Meeting in Washington. Resolutions were adopted by the council and transmitted to 
the board, but their purpose was closely guarded. An atmosphere of deep mystery 
was thrown about the proceedings both by the board and the council. Every effort 
was made to guard the proceedings of this extraordinary session. Evasive replies 
were given to newspaper correspondents." 

Only the innermost council of "The London Connection" knew that it had been 
decided at this "mystery meeting" to bring down the curtain on the greatest 
speculative boom in American history. Those in the know began to sell off all 
speculative stocks and put their money in government bonds. Those who were not 
privy to this secret information, and they included some of the wealthiest men in 
America, continued to hold their speculative stocks and lost everything they had. 

In FDR, My Exploited Father-in-Law, Col. Curtis B. Dall, who was a broker on 
Wall Street at that time, writes of the Crash, "Actually it was the calculated 
'shearing' of the public by the World Money-Powers, triggered by the planned 
sudden shortage of the supply of call money in the New York money market. "90 
Overnight, the Federal Reserve System had raised the call rate to twenty percent. 
Unable to meet this rate, the speculators' only alternative was to jump out of 
windows. 

The New York Federal Reserve Bank rate, which dictated the national interest rate, 
went to six percent on November 1, 1929. After the investors had been bankrupted, 
it dropped to one and one-half percent on May 8, 1931. Congressman Wright 
Patman in "A Primer On Money", says that the money supply decreased by eight 
billion dollars from 1929 to 1933, causing 11,630 banks of the total of 26,401 in the 
United States to go bankrupt and close their doors. 

The Federal Reserve Board had already warned the stockholders of the Federal 
Reserve Banks to get out of the Market, on February 6, 1929, but it had not 
bothered to say anything to the rest of the people. Nobody knew what was going on 
except the Wall Street bankers who were running the show. Gold movements were 
completely unreliable. The Quarterly Journal of Economics noted that: 

"The question has been raised, not only in this country, but in several European 
countries, as to whether customs statistics record with accuracy the movements of 
precious metals, and, when investigation has been made, confidence in such figures 
has been weakened rather than strengthened. Any movement between France and 
England, for instance, should be recorded in each country, but such comparison 
shows an average yearly discrepancy of fifty million francs for France and eighty- 
five million francs for England. These enormous discrepancies are not accounted 
for." 

The Right Honorable Reginald McKenna stated that: 



90 Col. Curtis B. Dall, F.D.R., My Exploited Father-in-Law, Liberty Lobby, 
Wash., D.C. 1970 

145 



"Study of the relations between changes in gold stock and movement in price levels 
shows what should be very obvious, but is by no means recognized, that the gold 
standard is in no sense automatic in operation. The gold standard can be, and is, 
usefully managed and controlled for the benefit of a small group of international 
traders." 

In August 1929, the Federal Reserve Board raised the rate to six percent. The Bank 
of England in the next month raised its rate from five and one-half percent to six 
and one-half percent. Dr. Friday in the September, 1929, issue of Review of Reviews, 
could find no reason for the Board's action: 

"The Federal Reserve statement for August 7, 1929, shows that signs of inadequacy 
for autumn requirements do not exist. Gold resources are considerably more than 
the previous year, and gold continues to move in, to the financial embarrassment of 
Germany and England. The reasons for the Board's action must be sought 
elsewhere. The public has been given only the hint that 'This problem has presented 
difficulties because of certain peculiar conditions'. Every reason which Governor 
Young advanced for lowering the bank rate last year exists now. Increasing the rate 
means that not only is there danger of drawing gold from abroad, but imports of the 
yellow metal have been in progress for the last four months. To do anything to 
accentuate this is to take the responsibility for bringing on a world-wide credit 
deflation." 

Thus we find that not only was the Federal Reserve System responsible for the First 
World War, which it made possible by enabling the United States to finance the 
Allies, but its policies brought on the world-wide depression of 1929-31. Governor 
Adolph C. Miller stated at the Senate Investigation of the Federal Reserve Board in 
1931 that: 

"If we had had no Federal Reserve System, I do not think we would have had as bad 
a speculative situation as we had, to begin with. " 

Carter Glass replied, "You have made it clear that the Federal Reserve Board 
provided a terrific credit expansion by these open market transactions." 

Emmanuel Goldenweiser said, "In 1928-29 the Federal Board was engaged in an 
attempt to restrain the rapid increase in security loans and in stock market 
speculation. The continuity of this policy of restraint, however, was interrupted by 
reduction in bill rates in the autumn of 1928 and the summer of 1929." 

Both J.P. Morgan and Kuhn, Loeb Co. had "preferred lists" of men to whom they 
sent advance announcements of profitable stocks. The men on these preferred lists 
were allowed to purchase these stocks at cost, that is, anywhere from 2 to 15 points a 
share less than they were sold to the public. The men on these lists were fellow 
bankers, prominent industrialists, powerful city politicians, national Committeemen 
of the Republican and Democratic Parties, and rulers of foreign countries. The men 
on these lists were notified of the coming crash, and sold all but so-called gilt-edged 
stocks, General Motors, Dupont, etc. The prices on these stocks also sank to record 
lows, but they came up soon afterwards. How the big bankers operated in 

146 



1929 is revealed by a Newsweek story on May 30, 1936, when a Roosevelt appointee, 
Ralph W. Morrison, resigned from the Federal Reserve Board: 

"The consensus of opinion is that the Federal Reserve Board has lost an able man. 
He sold his Texas utilities stock to Insull for ten million dollars, and in 1929 called a 
meeting and ordered his banks to close out all security loans by September 1. As a 
result, they rode through the depression with flying colors. " 

Predictably enough, all of the big bankers rode through the depression "with flying 
colors." The people who suffered were the workers and farmers who had invested 
their money in get-rich stocks, after the President of the United States, Calvin 
Coolidge, and the Secretary of the Treasury, Andrew Mellon, had persuaded them 
to do it. 

There had been some warnings of the approaching crash in England, which 
American newspapers never saw. The London Statist on May 25, 1929 said: 

"The banking authorities in the United States apparently want a business panic to 
curb speculation." 

The London Economist on May 11, 1929, said: 

"The events of the past year have seen the beginnings of a new technique, which, if 
maintained and developed, may succeed in 'rationing the speculator without 
injuring the trader.'" 

Governor Charles S. Hamlin quoted this statement at the Senate hearings in 1931 
and said, in corroboration of it: 

"That was the feeling of certain members of the Board, to remove Federal Reserve 
credit from the speculator without injuring the trader." 

Governor Hamlin did not bother to point out that the "speculators" he was out to 
break were the school-teachers and small town merchants who had put their savings 
into the stock market, or that the "traders" he was trying to protect were the big 
Wall Street operators, Bernard Baruch and Paul Warburg. 

When the Federal Reserve Bank of New York raised its rate to six percent on 
August 9, 1929, market conditions began which culminated in tremendous selling 
orders from October 24 into November, which wiped out a hundred and sixty 
billion dollars worth of security values. That was a hundred and sixty billions which 
the American citizens had one month and did not have the next. Some idea of the 
calamity may be had if we remember that our enormous outlay of money and goods 
in the Second World War amounted to not much more than two hundred billions of 
dollars, and a great deal of that remained as negotiable securities in the national 
debt. The stock market crash is the greatest misfortune which the United States has 
ever suffered. 

The Academy of Political Science of Columbia University in its annual meeting in 
January, 1930, held a post-mortem on the Crash of 1929. Vice- 

147 



President Paul Warburg was to have presided, and Director Ogden Mills was to 
have played an important part in the discussion. However, these two gentlemen did 
not show up. Professor Oliver M.W. Sprague of Harvard University remarked of 
the crash: 

"We have here a beautiful laboratory case of the stock market's dropping 
apparently from its own weight. " 

It was pointed out that there was no exhaustion of credit, as in 1893, nor any 
currency famine, as in the Panic of 1907, when clearing-house certificates were 
resorted to, nor a collapse of commodity prices, as in 1920. What then, had caused 
the crash? The people had purchased stocks at high prices and expected the prices 
to continue to rise. The prices had to come down, and they did. It was obvious to the 
economists and bankers gathered over their brandy and cigars at the Hotel Astor 
that the people were at fault. Certainly the people had made a mistake in buying 
over-priced securities, but they had been talked into it by every leading citizen from 
the President of the United States on down. Every magazine of national circulation, 
every big newspaper, and every prominent banker, economist, and politician, had 
joined in the big confidence game of urging people to buy those over-priced 
securities. When the Federal Reserve Bank of New York raised its rate to six 
percent, in August 1929, people began to get out of the market, and it turned into a 
panic which drove the prices of securities down far below their natural levels. As in 
previous panics, this enabled both Wall Street and foreign operators in the know to 
pick up "blue-chip" and gilt-edged" securities for a fraction of their real value. 

The Crash of 1929 also saw the formation of giant holding companies which picked 
up these cheap bonds and securities, such as the Marine Midland Corporation, the 
Lehman Corporation, and the Equity Corporation. In 1929 J.P. Morgan Company 
organized the giant food trust, Standard Brands. There was an unequaled 
opportunity for trust operators to enlarge and consolidate their holdings. 

Emmanuel Goldenweiser, director of research for the Federal Reserve System, said, 
in 1947: 

"It is clear in retrospect that the Board should have ignored the speculative 
expansion and allowed it to collapse of its own weight." 

This admission of error eighteen years after the event was small comfort to the 
people who lost their savings in the Crash. 

The Wall Street Crash of 1929 was the beginning of a world-wide credit deflation 
which lasted through 1932, and from which the Western democracies did not 
recover until they began to rearm for the Second World War. During this 
depression, the trust operators achieved further control by their backing of three 
international swindlers, The Van Sweringen brothers, Samuel Insull, and Ivar 
Kreuger. These men pyramided billions of dollars worth of securities to fantastic 
heights. The bankers who promoted 

148 



them and floated their stock issue could have stopped them at any time, by calling 
loans of less than a million dollars, but they let these men go on until they had 
incorporated many industrial and financial properties into holding companies, 
which the banks then took over for nothing. Insull piled up public utility holdings 
throughout the Middle West, which the banks got for a fraction of their worth. Ivar 
Kreuger was backed by Lee Higginson Company, supposedly one of the nation's 
most reputable banking houses. The Saturday Evening Post called him "more than 
a financial titan", and the English review Fortnightly said, in an article written 
December 1931, under the title, "A Chapter in Constructive Finance": "It is as a 
financial irrigator that Kreuger has become of such vital importance to Europe."* 

"Financial irrigator" we may remember, was the title bestowed upon Jacob Schiff 
by Newsweek Magazine, when it described how Schiff had bought up American 
railroads with Rothschild's money. 

The New Republic remarked on January 25th, 1933, when it commented on the fact 
that Lee Higginson Company had handled Kreuger and Toll Securities on the 
American market: 

"Three-quarters of a billion dollars was made away with. Who was able to dictate to 
the French police to keep secret the news of this extremely important suicide for 
some hours, during which somebody sold Kreuger securities in large amounts, thus 
getting out of the market before the debacle?" 

The Federal Reserve Board could have checked the enormous credit expansion of 
Insull and Kreuger by investigating the security on which their loans were being 
made, but the Governors never made any examination of the activities of these men. 

The modern bank with the credit facilities it affords, gives an opportunity which 
had not previously existed for such operators as Kreuger to make an appearance of 
abundant capital by the aid of borrowed capital. This enables the speculator to buy 
securities with securities. The only limit to the amount he can corner is the amount 
to which the banks will back him, and, if a speculator is being promoted by a 
reputable banking house, as Kreuger was promoted by Lee Higginson Company, 
the only way he could be stopped would be by an investigation of his actual financial 
resources, which in Kreuger's case would have proved to be nil. 

The leader of the American people during the Crash of 1929 and the subsequent 
depression was Herbert Hoover. After the first break of the 



* NOTE: Ivar Kreuger, we may recall, was occasionally the personal guest of his old 
friend, President Herbert Hoover, at the White House. Hoover seems to have 
maintained a cordial relationship with many of the most prominent swindlers of the 
twentieth century, including his partner, Emile Francqui. The receivership of the 
billion dollar Kreuger Fraud was handled by Samuel Untermeyer, former counsel 
for Pujo Committee hearings. 



149 



market (the five billion dollars in security values which disappeared on 
October 24, 1929) President Hoover said: 

"The fundamental business of the country, that is, production and 
distribution of commodities, is on a sound and prosperous basis. " 

His Secretary of the Treasury, Andrew Mellon, stated on December 25, 1929, 
that: 

"The Government's business is in sound condition." 

His own business, the Aluminum Company of America, apparently was not 
doing so well, for he had reduced the wages of all employees by ten percent. 

The New York Times reported on April 7, 1931, "Montagu Norman, 
Governor of the Bank of England, conferred with the Federal Reserve Board 
here today. Mellon, Meyer, and George L. Harrison, Governor of the Federal 
Reserve Bank of New York, were present." 

The London Connection had sent Norman over this time to ensure that the 
Great Depression was proceeding according to schedule. Congressman Louis 
McFadden had complained, as reported in The New York Times, July 4, 
1930, "Commodity prices are being reduced to 1913 levels. Wages are being 
reduced by the labor surplus of four million unemployed. The Morgan 
control of the Federal Reserve System is exercised through control of the 
Federal Reserve Bank of New York, the mediocre representation and 
acquiescence of the Federal Reserve Board in Washington. " As the 
depression deepened, the trust's lock on the American economy 
strengthened, but no finger was pointed at the parties who were controlling 
the system. 



150 



CHAPTER THIRTEEN 

The 1930's 



In 1930 Herbert Hoover appointed to the Federal Reserve Board an old 
friend from World War I days, Eugene Meyer, Jr., who had a long record of 
public service dating from 1915, when he went into partnership with Bernard 
Baruch in the Alaska- Juneau Gold Mining Company. Meyer had been a 
Special Advisor to the War Industries Board on Non-Ferrous Metals (gold, 
silver, etc.); Special Assistant to the Secretary of War on aircraft production; 
in 1917 he was appointed to the National Committee on War Savings, and 
was made Chairman of the War Finance Corporation from 1918-1926. He 
then was appointed chairman of the Federal Farm Loan Board from 1927- 
29. Hoover put him on the Federal Reserve Board in 1930, and Franklin D. 
Roosevelt created the Reconstruction Bank for Reconstruction and 
Development in 1946. Meyer must have been a man of exceptional ability to 
hold so many important posts. However, there were some Senators who did 
not believe he should hold any Government office, because of his family 
background as an international gold dealer and his mysterious operations in 
billions of dollars of Government securities in the First World War. 
Consequently, the Senate held Hearings to determine whether Meyer ought 
to be on the Federal Reserve Board. 

At these Hearings, Representative Louis T. McFadden, Chairman of the 
House Banking and Currency Committee, said: 

"Eugene Meyer, Jr. has had his own crowd with him in the government since 
he started in 1917. 

His War Finance Corporation personnel took over the Federal Farm Loan 
System, and almost immediately afterwards, the Kansas City Join Stock 
Land Bank and the Ohio Joint Stock Land Bank failed. " 

REPRESENTATIVE RAINEY: Mr. Meyer, when he nominally resigned as 
head of the Federal Farm Loan Board, did not really cease his activities 
there. He left behind him an able body of wreckers. They are continuing his 
policies and consulting with him. Before his appointment, he was frequently 
in consultation with Assistant Secretary of the Treasury Dewey. Just before 
his appointment, the Chicago Joint Land Stock Bank, the Dallas Joint Stock 
Land Bank, the Kansas City Joint Land Stock Bank, and the Des Moines 
Land Bank were all functioning. Their bonds 



151 



were selling at par. The then farm commissioner had an understanding with 
Secretary Dewey that nothing would be done without the consent and approval of 
the Federal Farm Loan Board. A few days afterwards, United States Marshals, with 
pistols strapped at their sides, and sometimes with drawn pistols, entered these five 
banks and demanded that the banks be turned over to them. Word went out all over 
the United States, through the newspapers, as to what had happened, and these 
banks were ruined. This led to the breach with the old Federal Farm Loan Board, 
and to the resignation of three of its members, and the appointment of Mr. Meyer to 
be head of that Board. 

SENATOR CAREY: Who authorized the marshals to take over the banks? 

REP. RAINEY: Assistant Secretary of the Treasury Dewey. That started the ruin of 
all these rural banks, and the Gianninis bought them up in great numbers." 

World's Work of February 1931, said: 

"When the World War began for us in 1917, Mr. Eugene Meyer, Jr. was among the 
first to be called to Washington. In April, 1918, President Wilson named him 
Director of the War Finance 

Corporation. This corporation loaned out 700 million dollars to banking and 
financial institutions. " 

The Senate Hearings on Eugene Meyer, Jr. continued: 

REPRESENTATIVE MCFADDEN: "Lazard Freres, the international banking 
house of New York and Paris, was a Meyer family banking house. It frequently 
figures in imports and exports of gold, and one of the important functions of the 
Federal Reserve System has to do with gold movements in the maintenance of its 
own operations. In looking over the minutes of the hearing we had last Thursday, 
Senator Fletcher had asked Mr. Meyer, 'Have you any connections with 
international banking?' Mr. Meyer had answered, 'Me? Not personally.' This last 
question and answer do not appear in the stenographic transcript. Senator Fletcher 
remembers asking the question and the answer. It is an odd omission. 

SENATOR BROOKHART: I understand that Mr. Meyer looked it over for 
corrections. 

REPRESENTATIVE MCFADDEN: Mr. Meyer is a brother-in-law of George 
Blumenthal, a member of the firm of J.P. Morgan Company, which represents the 
Rothschild interests. He also is a liaison officer between the French Government and 
J.P. Morgan. Edmund Piatt, who had eight years to go on a term of ten years as 
Governor of the Federal Reserve Board, resigned to make room for Mr. Meyer. 
Piatt was given a Vice-Presidency of Marine Midland Corporation by Meyer's 
brother-in-law Alfred A. Cook. Eugene Meyer, Jr. as head of the War Finance 
Corporation, engaged in the placing of two billion dollars in Government 



152 



securities, placed many of those orders first with the banking house now located at 
14 Wall Street in the name of Eugene Meyer, Jr. Mr. Meyer is now a large 
stockholder in the Allied Chemical Corporation. I call your attention to House 
Report No. 1635, 68th Congress, 2nd Session, which reveals that at least twenty-four 
million dollars in bonds were duplicated. Ten billion dollars worth of bonds 
surreptitiously destroyed. Our committee on Banking and Currency found the 
records of the War Finance Corporation under Eugene Meyer, Jr. extremely faulty. 
While the books were being brought before our committee by the people who were 
custodians of them and taken back to the Treasury at night, the committee 
discovered that alterations were being made in the permanent records." 

The record of public service did not prevent Eugene Meyer, Jr. from continuing to 
serve the American people on the Federal Reserve Board, as Chairman of the 
Reconstruction Finance Corporation, and as head of the International Bank. 

President Rand, of the Marine Midland Corporation, questioned about his sudden 
desire for the services of Edmund Piatt, said: 

"We pay Mr. Piatt $22,000 a year, and we took his secretary over, of course." This 
meant another five thousand a year. 

Senator Brookhart showed that Eugene Meyer, Jr. administered the Federal Farm 
Loan Board against the interests of the American farmer, saying: 

"Mr. Meyer never loaned more than 180 million dollars of the capital stock of 500 
million dollars of the farm loan board, so that in aiding the farmers he was not even 
able to use half of the capital." 

MR. MEYER: Senator Kenyon wrote me a letter which showed that I cooperated 
with great advantage to the people of Iowa. 

SENATOR BROOKHART: "You went out and took the opposite side from the 
Wall Street crowd. They always send somebody out to do that. I have not yet 
discovered in your statements much interest in making loans to the farmers at large, 
or any real effort to help their condition. In your two years as head of the Federal 
Farm Loan Board you made very few loans compared to your capital. You loaned 
only one-eighth of the demand, according to your own statement." 

Despite the damning evidence uncovered at these Senate Hearings, Eugene Meyer, 
Jr. remained on the Federal Reserve Board. 

During this tragic period, chairman Louis McFadden of the House Banking and 
Currency Committee continued his lone crusade against the "London Connection" 
which had wrecked the nation. On June 10, 1932, McFadden addressed the House of 
Representatives : 

"Some people think the Federal Reserve banks are United States Government 
institutions. They are not government institutions. They are private credit 
monopolies which prey upon the people of the United 



153 



States for the benefit of themselves and their foreign customers. The Federal 
Reserve banks are the agents of the foreign central banks. Henry Ford has 
said, 'The one aim of these financiers is world control by the creation of 
inextinguishable debts.' The truth is the Federal Reserve Board has usurped 
the Government of the United States by the arrogant credit monopoly which 
operates the Federal Reserve Board and the Federal Reserve Banks." 

On January 13, 1932, McFadden had introduced a resolution indicting the 
Federal Reserve Board of Governors for "Criminal Conspiracy": 

"Whereas I charge them, jointly and severally, with the crime of having 
treasonably conspired and acted against the peace and security of the United 
States and having treasonably conspired to destroy constitutional 
government in the United States. Resolved, that the Committee on the 
Judiciary is authorized and directed as a whole or by subcommittee to 
investigate the official conduct of the Federal Reserve Board and agents to 
determine whether, in the opinion of the said committee, they have been 
guilty of any high crime or misdemeanour which in the contemplation of the 
Constitution requires the interposition of the Constitutional powers of the 
House." 

No action was taken on this Resolution. McFadden came back on December 
13, 1932 with a motion to impeach President Herbert Hoover. Only five 
Congressmen stood with him on this, and the resolution failed. The 
Republican majority leader of the House remarked, "Louis T. McFadden is 
now politically dead. " 

On May 23, 1933, McFadden introduced House Resolution No. 158, Articles 
of Impeachment against the Secretary of the Treasury, two Assistant 
Secretaries of the Treasury, the Federal Reserve Board of Governors, and 
officers and directors of the Federal Reserve Banks for their guilt and 
collusion in causing the Great Depression. "I charge them with having 
unlawfully taken over 80 billion dollars from the United States Government 
in the year 1928, the said unlawful taking consisting of the unlawful 
recreation of claims against the United States Treasury to the extent of over 
80 billion dollars in the year 1928, and in each year subsequent, and by 
having robbed the United States Government and the people of the United 
States by their theft and sale of the gold reserve of the United States." 

The Resolution never reached the floor. A whispering campaign that McFadden was 
insane swept Washington, and in the next Congressional elections, he was 
overwhelmingly defeated by thousands of dollars poured into his home district of 
Canton, Pennsylvania. 

In 1932, the American people elected Franklin D. Roosevelt President of the United 
States. This was hailed as the freeing of the American people from the evil influence 
which had brought on the Great Depres- 

154 



sion, the ending of Wall Street domination, and the disappearance of the 
banker from Washington. 

Roosevelt owed his political career to a fortuitous circumstance. As Assistant 
Secretary of the Navy during World War I, because of old school ties, he had 
intervened to prevent prosecution of a large ring of homosexuals in the Navy 
which included several Groton and Harvard chums. This brought him to the 
favorable appreciation of a wealthy international homosexual set which 
travelled back and forth between New York and Paris, and which was 
presided over by Bessie Marbury, of a very old and prominent New York 
family. Bessie's "wife", who lived with her for a number of years, was Elsie 
de Wolfe, later Lady Mendl in a "mariage de convenance", the arbiter of the 
international set. They recruited J.P. Morgan's youngest daughter, Anne 
Morgan, into their circle, and used her fortune to restore the Villa Trianon in 
Paris, which became their headquarters. During World War I, it was used as 
a hospital. Bessie Marbury expected to be awarded the Legion of Honor by 
the French Government as a reward, but J.P. Morgan, Jr., who despised her 
for corrupting his youngest sister, requested the French Government to 
withhold the award, which they did. Smarting from this rebuff, Bessie 
Marbury threw herself into politics, and became a power in the Democratic 
National Party. She had also recruited Eleanor Roosevelt into her circle, and, 
during a visit to Hyde Park, Eleanor confided that she was desperate to find 
something for "poor Franklin" to do, as he was confined to a wheelchair, and 
was very depressed. 

"I know what we'll do," exclaimed Bessie, "We'll run him for Governor of 
New York! " Because of her power, she succeeded in this goal, and Roosevelt 
later became President. 

One of the men Roosevelt brought down from New York with him as a 
Special Advisor to the Treasury was Earl Bailie of J & W Seligman 
Company, who had become notorious as the man who handed the $415,000 
bribe to Juan Leguia, son of the President of Peru, in order to get the 
President to accept a loan from J & W Seligman Company. There was a 
great deal of criticism of this appointment, and Mr. Roosevelt, in keeping 
with his new role as defender of the people, sent Earl Bailie back to 
@bringing in New York. 

Franklin D. Roosevelt himself was an international banker of ill repute, having 
floated large issues of foreign bonds in this country in the 1920s. These bonds 
defaulted, and our citizens lost millions of dollars, but they still wanted Mr. 
Roosevelt as President. The New York Directory of Directors lists Mr. Roosevelt as 
President and Director of United European Investors, Ltd., in 1923 and 1924, which 
floated many millions of German marks in this country, all of which defaulted. 
Poor's Directory of Directors lists him as a director of The International Germanic 
Trust Company in 1928. Franklin D. Roosevelt was also an advisor to the 

155 



Federal International Banking Corporation, an Anglo-American outfit dealing in 
foreign securities in the United States. 

Roosevelt's law firm of Roosevelt and O'Connor during the 1920s represented many 
international corporations. His law partner, Basil O'Connor, was a director in the 
following corporations: 

Cuban-American Manganese Corporation, Venezuela-Mexican Oil Corporation, 
West Indies Sugar Corporation, American Reserve Insurance Corporation, Warm 
Springs Foundation. He was director in other corporations, and later head of the 
American Red Cross. 

When Franklin D. Roosevelt took office as President of the United States, he 
appointed as Director of the Budget James Paul Warburg, son of Paul Warburg, 
and Vice President of the International Acceptance Bank and other corporations. 
Roosevelt appointed as Secretary of the Treasury W.H. Woodin, one of the biggest 
industrialists in the country, Director of the American Car Foundry Company and 
numerous other locomotive works, Remington Arms, The Cuba Company, 
Consolidated Cuba Railroads, and other big corporations. Woodin was later 
replaced by Henry Morgenthau, Jr., son of the Harlem real estate operator who had 
helped put Woodrow Wilson in the White House. With such a crew as this, 
Roosevelt's promises of radical social changes showed little likelihood of fulfillment. 
One of the first things he did was to declare a bankers' moratorium, to help the 
bankers get their records in order. 

World's Work says: 

"Congress has left Charles G. Dawes and Eugene Meyer, Jr. free to appraise, by 
their own methods, the security which prospective borrowers of the two billion 
dollar capital may offer." 

Roosevelt also set up the Securities Exchange Commission, to see to it that no new 
faces got into the Wall Street gang, which caused the following colloquy in 
Congress: 

REPRESENTATIVE WOLCOTT: At hearings before this committee in 1933, the 
economists showed us charts which proved beyond all doubt that the dollar value 
commodities followed the price level of gold. It did not, did it? 

LEON HENDERSON: No. 

REPRESENTATIVE GIFFORD: Wasn't Joe Kennedy put in [as Chairman of the 
Securities Exchange Committee] by President Roosevelt because he was sympathetic 
with big business? 

LEON HENDERSON: I think so. 

Paul Einzig pointed out in 1935 that: 



156 



"President Roosevelt was the first to declare himself openly in favor of a monetary 
policy aiming at a deliberately engineered rise in prices. In a negative sense his 
policy was successful. Between 1933 and 1935 he succeeded in reducing private 
indebtedness, but this was done at the cost of increasing public indebtedness." 

In other words, he eased the burden of debts off of the rich onto the poor, since the 
rich are few and the poor many. 

Senator Robert L. Owen, testifying before the House Committee on Banking and 
Currency in 1938, said: 

"I wrote into the bill which was introduced by me in the Senate on June 26, 1913, a 
provision that the powers of the System should be employed to promote a stable 
price level, which meant a dollar of stable purchasing, debt-paying power. It was 
stricken out. The powerful money interests got control of the Federal Reserve Board 
through Mr. Paul Warburg, Mr. Albert Strauss, and Mr. Adolph C. Miller and they 
were able to have that secret meeting of May 18, 1920, and bring about a 
contraction of credit so violent it threw five million people out of employment. In 
1920 that Reserve Board deliberately caused the Panic of 1921. The same people, 
unrestrained in the stock market, expanding credit to a great excess between 1926 
and 1929, raised the price of stocks to a fantastic point where they could not 
possibly earn dividends, and when the people realized this, they tried to get out, 
resulting in the Crash of October 24, 1929." 

Senator Owen did not go into the question of whether the Federal Reserve Board 
could be held responsible to the public. Actually, they cannot. They are public 
officials who are appointed by the President, but their salaries are paid by the 
private stockholders of the Federal Reserve Banks. 

Governor W.P.G. Harding of the Federal Reserve Board testified in 1921 that: 

"The Federal Reserve Bank is an institution owned by the stockholding member 
banks. The Government has not a dollar's worth of stock in it." 

However, the Government does give the Federal Reserve System the use of its 
billions of dollars of credit, and this gives the Federal Reserve its characteristic of a 
central bank, the power to issue currency on the Government's credit. We do not 
have Federal Government notes or gold certificates as currency. We have Federal 
Reserve Bank notes, issued by the Federal Reserve Banks, and every dollar they 
print is a dollar in their pocket. 

W. Randolph Burgess, of the Federal Reserve Bank of New York, stated before the 
Academy of Political Science in 1930 that: 

"In its major principles of operation the Federal Reserve System is no different 
from other banks 

of issue, such as the Bank of England, the Bank of France, or the Reichsbank." 



157 



All of these central banks have the power of issuing currency in their 
respective countries. Thus, the people do not own their own money in 
Europe, nor do they own it here. It is privately printed for private profit. The 
people have no sovereignty over their money, and it has developed that they 
have no sovereignty over other major political issues such as foreign policy. 

As a central bank of issue, the Federal Reserve System has behind it all the 
enormous wealth of the American people. When it began operations in 1913, 
it created a serious threat to the central banks of the impoverished countries 
of Europe. Because it represented this great wealth, it attracted far more 
gold than was desirable in the 1920s, and it was apparent that soon all of the 
world's gold would be piled up in this country. This would make the gold 
standard a joke in Europe, because they would have no gold over there to 
back their issue of money and credit. It was the Federal Reserve's avowed 
aim in 1927, after the secret meeting with the heads of the foreign central 
banks, to get large quantities of that gold sent back to Europe, and its 
methods of doing so, the low interest rate and heavy purchases of 
Government securities, which created vast sums of new money, intensified 
the stock market speculation and made the stock market crash and resultant 
depression a national disaster. 

Since the Federal Reserve System was guilty of causing this disaster, we 
might suppose that they would have tried to alleviate it. However, through 
the dark years of 1931 and 1932, the Governors of the Federal Reserve Board 
saw the plight of the American people worsening and did nothing to help 
them. This was more criminal than the original plotting of the Depression. 
Anyone who lived through those years in this country remembers the 
widespread unemployment, the misery, and the hunger of our people. At any 
time during those years the Federal Reserve Board could have acted to 
relieve this situation. 

The problem was to get some money back into circulation. So much of the 
money normally used to pay rent and food bills had been sucked into Wall 
Street that there was no money to carry on the business of living. In many 
areas, people printed their own money on wood and paper for use in their 
communities, and this money was good, since it represented obligations to 
each other which people fulfilled. 

The Federal Reserve System was a central bank of issue. It had the power to, 
and did, when it suited its owners, issue millions of dollars of money. Why 
did it not do so in 1931 and 1932? The Wall Street bankers were through 
with Mr. Herbert Hoover, and they wanted Franklin D. Roosevelt to come in 
on a wave of glory as the saviour of the nation. Therefore, the American 
people had to starve and suffer until March of 1933, when the White Knight 
came riding in with his crew of Wall Street 

158 



bribers and put some money into circulation. That was all there was to it. As soon as 
Mr. Roosevelt took office, the Federal Reserve began to buy Government securities 
at the rate of ten million dollars a week for ten weeks, and created a hundred 
million dollars in new money, which alleviated the critical famine of money and 
credit, and the factories started hiring people again. 

During the Roosevelt Administration, The Federal Reserve Board, insofar as the 
public was concerned, was Marriner Eccles, an emulator and admirer of "the 
Chief". Eccles was a Utah banker, President of the First Securities Corporation, a 
family investment trust consisting of a number of banks which Eccles had picked up 
cheap during the Agricultural Depression of 1920-21. Eccles also was a director of 
such corporations as Pet Milk Company, Mountain States Implement Company, 
and Amalgamated Sugar. As a big banker, Eccles fitted in well with the group of 
powerful men who were operating Roosevelt. 

There was some discussion in Congress as to whether Eccles ought to be on the 
Federal Reserve Board at the same time he had all of these banks in Utah, but he 
testified that he had very little to do with the First Securities Corporation besides 
being President of it, and so he was confirmed as Chairman of the Board. 

Eugene Meyer, Jr. now resigned from the Board to spend more of his time lending 
the two billion dollar capital of the Reconstruction Finance Corporation, and 
determining the value of collateral by his own methods. 

The Banking Act of 1935, which greatly increased Roosevelt's power over the 
nation's finances, was an integral part of the legislation by which he proposed to 
extend his reign in the United States. It was not opposed by the people as was the 
National Recovery Act, because it was not so naked an infringement of their 
liberties. It was, however, an important measure. First of all, it extended the terms 
of office of the Federal Reserve Board of Governors to fourteen years, or, three and 
a half times the length of a Presidential term. This meant that a President assuming 
office who might be hostile to the Board could not appoint a majority to it who 
would be favorable to him. Thus, a monetary policy inaugurated before a President 
came into the White House would go on regardless of his wishes. 

The Banking Act of 1935 also repealed the clause of the Glass-Steagall Banking Act 
of 1933, which had provided that a banking house could not be on the Stock 
Exchange and also be involved in investment banking. This clause was a good one, 
since it prevented a banking house from lending money to a corporation which it 
owned. Still it is to be remembered that this clause covered up some other provisions 
in that Act, such as the creation of the Federal Deposit Insurance Corporation, 
providing insurance money to the amount of 150 million dollars, to 



159 



guarantee fifteen billion dollars worth of deposits. This increased the power of the 
big bankers over small banks and gave them another excuse to investigate them. 
The Banking Act of 1933 also legislated that all earnings of the Federal Reserve 
Banks must by law go to the banks themselves. At last the provision in the Act that 
the Government share in the profits was gotten rid of. It had never been observed, 
and the increase in the assets of the Federal Reserve Banks from 143 million dollars 
in 1913 to 45 billion dollars in 1949 went entirely to the private stockholders of the 
banks. Thus, the one constructive provision of the Banking Act of 1933 was repealed 
in 1935, and also the Federal Reserve Banks were now permitted to loan directly to 
industry, competing with the member banks, who could not hope to match their 
capacity in arranging large loans. 

When the provision that banks could not be involved in investment banking and 
operate on the Stock Exchange was repealed in 1935, Carter Glass, originator of 
that provision, was asked by reporters: 

"Does that mean that J.P. Morgan can go back into investment banking?" 

"Well, why not?" replied Senator Glass. "There has been an outcry all over the 
country that the banks will not make loans. Now the Morgans can go back to 
underwriting. " 

Because that provision was unfavorable to them, the bankers had simply clamped 
down on making loans until it was repealed. 

Newsweek of March 14, 1936, noted that: 

"The Federal Reserve Board fired nine chairmen of Reserve Banks, explaining that 
'it intended to make the chairmanships of the Reserve Banks largely a part-time job 
on an honorary basis.'" 

This was another instance of the centralization of control in the Federal Reserve 
System. The regional district system had never been an important factor in the 
administration of monetary policy, and the Board was not cutting down on its 
officials outside of Washington. The Chairman of the Senate Committee on Banking 
and Currency had asked, during the Gold Reserve Hearings of 1934: 

"Is it not true, Governor Young, that the Secretary of the Treasury for the past 
twelve years has dominated the policy of the Federal Reserve Banks and the Federal 
Reserve Board with respect to the purchase of United States bonds?" 

Governor Young had denied this, but it had already been brought out that on both 
of his hurried trips to this country in 1927 and 1929 to dictate Federal Reserve 
policy, Governor Montagu Norman of the Bank of England had gone directly to 
Andrew Mellon, Secretary of the Treasury, to get him to purchase Government 
securities on the open market and start the movement of gold out of this country 
back to Europe. 



160 



The Gold Reserve Hearings had also brought in other people who had more than a 
passing interest in the operations of the Federal Reserve System. James Paul 
Warburg, just back from the London Economic Conference with Professor O.M.W. 
Sprague and Henry L. Stimson, came in to declare that he thought we ought to 
modernize the gold standard. Frank Vanderlip suggested that we do away with the 
Federal Reserve Board and set up a Federal Monetary Authority. This would have 
made no difference to the New York bankers, who would have selected the 
personnel anyway. And Senator Robert L. Owen, longtime critic of the system, 
made the following statement: 

"The people did not know the Federal Reserve Banks were organized for profit- 
making. They were intended to stabilize the credit and currency supply of the 
country. That end has not been accomplished. Indeed, there has been the most 
remarkable variation in the purchasing power of money since the System went into 
effect. The Federal Reserve men are chosen by the big banks, through discreet little 
campaigns, and they naturally follow the ideals which are portrayed to them as the 
soundest from a financial point of view." 

Benjamin Anderson, economist for the Chase National Bank of New York, said: 

"At the moment, 1934, we have 900 million dollars excess reserves. In 1924, with 
increased reserves of 300 million, you got some three or four billion in bank 
expansion of credit very quickly. That extra money was put out by the Federal 
Reserve Banks in 1924 through buying government securities and was the cause of 
the rapid expansion of bank credit. The banks continued to get excess reserves 
because more gold came in, and because, whenever there was a slackening, the 
Federal Reserve people would put out some more. They held back a bit in 1926. 

Things firmed up a bit that year. And then in 1927 they put out less than 300 million 
additional reserves, set the wild stock market going, and that led us right into the 
smash of 1929." 

Dr. Anderson also stated that: 

"The money of the Federal Reserve Banks is money they created. When they buy 
Government securities they create reserves. They pay for the Government securities 
by giving checks on themselves, and those checks come to the commercial banks and 
are by them deposited in the Federal Reserve Banks, and then money exists which 
did not exist before." 

SENATOR BULKLEY: It does not increase the circulating medium at all? 

ANDERSON: No. 

This is an explanation of the manner in which the Federal Reserve Banks increased 
their assets from 143 million dollars to 45 billion dollars in thirty-five years. They 
did not produce anything, they were non-productive enterprises, and yet they had 
this enormous profit, merely by creating money, 95 percent of it in the form of 
credit, which did not add 

161 



to the circulating medium. It was not distributed among the people in the form of 
wages, nor did it increase the buying power of the farmers and workers. It was 
credit-money created by bankers for the use and profit of bankers, who increased 
their wealth by more than forty billion dollars in a few years because they had 
obtained control of the Government's credit in 1913 by passing the Federal Reserve 
Act. 

Marriner Eccles also had much to say about the creation of money. He considered 
himself an economist, and had been brought into the Government service by Stuart 
Chase and Rexford Guy Tugwell, two of Roosevelt's early brain-trusters. Eccles was 
the only one of the Roosevelt crowd who stayed in office throughout his 
administration. 

Before the House Banking and Currency Committee on June 24, 1941, Governor 
Eccles said: 

"Money is created out of the right to issue credit-money." 

Turning over the Government's credit to private bankers in 1913 gave them 
unlimited opportunities to create money. The Federal Reserve System could also 
destroy money in large quantities through open market operations. Eccles said, at 
the Silver Hearings of 1939: 

"When you sell bonds on the open market, you extinguish reserves." 

Extinguishing reserves means wiping out a basis for money and credit issue, or, 
tightening up on money and credit, a condition which is usually even more favorable 
to bankers than the creation of money. Calling in or destroying money gives the 
banker immediate and unlimited control of the financial situation, since he is the 
only one with money and the only one with the power to issue money in a time of 
money shortage. The money panics of 1873, 1893, 1920-21, and 1929-31, were 
characterized by a drawing in of the circulating medium. In economical terms, this 
does not sound like such a terrible thing, but when it means that people do not have 
money to pay their rent or buy food, and when it means that an employer has to lay 
off three-fourths of his help because he cannot borrow the money to pay them, the 
enormous guilt of the bankers and the long record of suffering and misery for which 
they are responsible would suggest that no punishment might be too severe for their 
crimes against their fellowmen. 

On September 30, 1940, Governor Eccles said: 

"If there were no debts in our money system, there would be no money." 

This is an accurate statement about our money system. Instead of money being 
created by the production of the people, the annual increase in goods and services, it 
is created by the bankers out of the debts of the people. Because it is inadequate, it is 
subject to great fluctuations and is basically unstable. These fluctuations are also a 
source of great profit. For that reason, the Federal Reserve Board has consistently 
opposed any 

162 



legislation which attempts to stabilize the monetary system. Its position has been set 
forth definitively in Chairman Eccles' letter to Senator Wagner on March 9, 1939, 
and the Memorandum issued by the Board on March 13, 1939. 

Chairman Eccles wrote that: 

"... you are advised that the Board of Governors of the Federal Reserve System 
does not favor the enactment of Senate Bill No. 31, a bill to amend the Federal 
Reserve Act, or any other legislation of this general character." 

The Memorandum of the Board stated, in its "Memorandum on Proposals to 
maintain prices at fixed levels" : 

"The Board of Governors opposes any bill which proposes a stable price level, on 
the grounds that prices do not depend primarily on the price or cost of money; that 
the Board's control over money cannot be made complete; and that steady average 
prices, even if obtainable by official action, would not insure lasting prosperity. " 

Yet William McChesney Martin, the Chairman of the Board of Governors in 1952, 
said before the Subcommittee on Debt Control, the Patman Committee, on March 
10, 1952 that "One of the fundamental purposes of the Federal Reserve Act is to 
protect the value of the dollar." 

Senator Flanders questioned him: "Is that specifically stated in the original 
legislation setting up the Federal Reserve System?" 

"No," replied Mr. Martin, "but it is inherent in the entire legislative history and in 
the surrounding circumstances. " 

Senator Robert L. Owen has told us how it was taken out of the original legislation 
against his will, and that the Board of Governors has opposed such legislation. 
Apparently Mr. Martin does not know this. 

Steady average prices, indeed, are impossible so long as we have the speculators on 
the stock exchange driving prices up and down in order to reap profits for 
themselves. Despite Governor Eccles' insistence that steady average prices would 
not insure lasting prosperity, they could do much to bring about this condition. A 
man on a yearly wage of $2,500 is not more prosperous if the price of bread 
increases five cents a loaf during the year. 

In 1935, Eccles said before the House Committee on Banking and Currency: 

"The Government controls the gold reserve, that is, the power to issue money and 
credit, thus largely regulating the price structure. " 

This is an almost direct contradiction of Eccles' statement in 1939 that prices do not 
depend, primarily, on the price or cost of money. 

In 1935, Governor Eccles stated before the House Committee: 

"The Federal Reserve Board has the power of open market operations. Open- 
market operations are the most important single instrument of 

163 



control over the volume and cost of credit in this country. When I say "credit" in 
this connection, I mean money, because by far the largest part of money in use by 
the people of this country is in the form of bank credit or bank deposits. When the 
Federal Reserve Banks buy bills or securities in the open market, they increase the 
volume of the people's money and lower its cost; and when they sell in the open 
market they decrease the volume of money and increase its cost. Authority over 
these operations, which affect the welfare of the whole people, must be invested in a 
body representing the national interest. " 

Governor Eccles testimony exposes the heart of the money machine which Paul 
Warburg revealed to his incredulous fellow bankers at Jekyll Island in 1910. Most 
Americans comment that they cannot understand how the Federal Reserve System 
operates. It remains beyond understanding, not because it is complex, but because it 
is so simple. If a confidence man comes up to you and offers to demonstrate his 
marvelous money machine, you watch while he puts in a blank piece of paper, and 
cranks out a $100 bill. That is the Federal Reserve System. You then offer to buy 
this marvelous money machine, but you cannot. It is owned by the private 
stockholders of the Federal Reserve Banks, whose identities can be traced partially, 
but not completely, to "the London Connection." 

At the House Banking and Currency Committee Hearings on June 6, 1960, 
Congressman Wright Patman, Chairman, questioned Carl E. Allen, President of the 
Federal Reserve Bank of Chicago, (p. 4). PATMAN: "Now Mr. Allen, when the 
Federal Reserve Open Market Committee buys a million dollar bond you create the 
money on the credit of the Nation to pay for that bond, don't you? ALLEN: That is 
correct. PATMAN: And the credit of the Nation is represented by Federal Reserve 
Notes in that case, isn't it? If the banks want the actual money, you give Federal 
Reserve notes in payment, don't you? ALLEN: That could be done, but nobody 
wants the Federal Reserve notes. PATMAN: Nobody wants them, because the banks 
would rather have the credit as reserves." 

This is the most incredible part of the Federal Reserve operation and one which is 
difficult for anyone to understand. How can any American citizen grasp the concept 
that there are people in this country who have the power to make an entry in a 
ledger that the government of the United States now owes them one billion dollars, 
and to collect the principal and interest on this "loan"? 

Congressman Wright Patman tells us in "The Primer of Money", p. 38 of going into 
a Federal Reserve Bank and asking to see their bonds on which the American people 
are paying interest. After being shown the bonds, he asked to see their cash, but they 
only had some ledgers and blank checks. Patman says, 

"The cash, in truth, does not exist and has never existed. What we call 'cash 
reserves' are simply bookkeeping credits entered upon ledgers 



164 



of the Federal Reserve Banks. The credits are created by the Federal Reserve Banks 
and then passed along through the banking system. " 

Peter L. Bernstein, in A Primer On Money, Banking and Gold says: 

"The trick in the Federal Reserve notes is that the Federal reserve banks lose no 
cash when they pay out this currency to the member banks. Federal Reserve notes 
are not redeemable in anything except what the Government calls 'legal tender'— 
that is, money that a creditor must be willing to accept from a debtor in payment of 
sums owed him. But since all Federal Reserve notes are themselves declared by law 
to be legal money, they are really redeemable only in themselves . . . they are an 
irredeemable obligation issued by the Federal Reserve Banks. "91 

As Congressman Patman puts it: 

"The dollar represents a one dollar debt to the Federal Reserve System. The Federal 
Reserve Banks create money out of thin air to buy Government bonds from the 
United States Treasury, lending money into circulation at interest, by bookkeeping 
entries of checkbook credit to the United States Treasury. The Treasury writes up 
an interest bearing bond for one billion dollars. The Federal Reserve gives the 
Treasury a one billion dollar credit for the bond, and has created out of nothing a 
one billion dollar debt which the American people are obligated to pay with 
interest." (Money Facts, House Banking and Currency Committee, 1964, p. 9) 

Patman continues, "Where does the Federal Reserve system get the money with 
which to create Bank Reserves? 

Answer. It doesn't get the money, it creates it. When the Federal Reserve writes a 
check, it is creating money. The Federal Reserve is a total moneymaking machine. It 
can issue money or checks." 

In 1951, the Federal Reserve Bank of New York published a pamphlet, "A Day's 
Work at the Federal Reserve Bank of New York." On page 22, we find that: 

"There is still another and more important element of public interest in the 
operation of banks besides the safekeeping of money; banks can 'create' money. 
One of the most important factors to remember in this connection is that the supply 
of money affects the general level of prices — the cost of living. The Cost of Living 
Index and money supply are parallel." 

The decisions of the Federal Reserve Board, or rather, the decisions which they are 
told to make by "parties unknown", affect the daily lives of every American by the 
effect of these decisions on prices. Raising the interest rate, or causing money to 
became "dearer" acts to limit the amount of money available in the market, as does 
the raising of reserve requirements by the 



91 Peter L. Bernstein, A Primer On Money, Banking and Gold, Vintage Books, New 
York, 1965, p. 104 

165 



Federal Reserve System. Selling bonds by the Open Market Committee also 
extinguishes and lowers the money supply. Buying government securities on 
the open market "creates" more money, as does lowering the interest rate 
and making money "cheaper". It is axiomatic that an increase in the money 
supply brings prosperity, and that a decrease in the money supply brings on 
a depression. Dramatic increases in the money which outstrip the supply of 
goods brings on inflation, "too much money chasing too few goods". A more 
esoteric aspect of the monetary system is "velocity of circulation", which 
sounds much more technical than it is. This is the speed at which money 
changes hands; if it is gold buried in the peasant's garden, that is a slow 
velocity of circulation, caused by a lack of confidence in the economy or the 
nation. Very rapid velocity of circulation, such as the stock market boom of 
the late 1920s, means quick turnover, spending and investment of money, 
and its stems from confidence, or overconfidence, in the economy. With a 
high velocity of circulation, a smaller money supply circulates among as 
many people and goods as a larger money supply would circulate with a 
slower velocity of circulation. We mention this because the velocity of 
circulation, or confidence in the economy, also is greatly affected by the 
Federal Reserve actions. Milton Friedman comments in Newsweek, May 2, 
1983, "The Federal Reserve's major function is to determine the money 
supply. It has the power to increase or decrease the money supply at any rate 
it chooses." 

This is an enormous power, because increasing the money supply can cause 
the re-election of an administration, while decreasing it can cause an 
administration to be defeated. Friedman goes on to criticize the Federal 
Reserve, "How is it that an institution which has so poor a record of 
performance nevertheless has so high a public reputation and even 
commands a considerable measure of credibility for its forecasts? " 

All open market transactions, which affect the money supply, are conducted 
for a single System account by the Federal Reserve Bank of New York on the 
behalf of all the Federal Reserve Banks, and supervised by an officer of the 
Federal Reserve Bank of New York. The conferences at which decisions are 
made to buy or sell securities by the Open Market Committee remain closed 
to the public, and the deliberations also remain a mystery. On May 8, 1928, 
The New York Times reported that Adolph C. Miller, Governor of the 
Federal Reserve Board, testifying before the House Banking and Currency 
Committee, stated that open market purchases and rediscount rates were 
established through "conversations". At that time, the purchases on the open 
market amounted to seventy or eighty million dollars a day, and would be 
ten times that today. These are vast sums to be manipulated on the basis of 
mere "conversations", but that is as much information as we can obtain. 



166 



Because of these mysterious transactions which affect the life, liberty and happiness of every 
American citizen, there have been numerous proposals such as Senate Document No. 23, 
presented by Mr. Logan on January 24, 1939, that "The Government should create, issue 
and circulate all the currency and credit needed to satisfy the spending power of the 
Government and the buying power of the consumers. The privilege of creating and issuing 
money is not only the supreme prerogative of Government, but it is the Government's 
greatest creative opportunity." 

On March 21, 1960, Congressman Wright Patman used a simple illustration in the 
Congressional Record of how banks "create money". 

"If I deposit $100 with my bank and the reserve requirements imposed by the Federal 
Reserve Bank are 20% then the bank can make a loan to John Doe of up to $80. Where does 
the $80 come from? It does not come out of my deposit of $100; on the contrary, the bank 
simply credits John Doe's account with $80. The bank can acquire Government obligations 
by the same procedure, by simply creating deposits to the credit of the government. Money 
creating is a power of the commercial banks . . . Since 1917 the Federal Reserve has given 
the private banks forty-six billion dollars of reserves." 

How this is done is best revealed by Governor Eccles at Hearings before the House 
Committee on Banking and Currency on June 24, 1941: 

ECCLES: "The banking system as a whole creates and extinguishes the deposits as they 
make loans and investments, whether they buy Government Bonds or whether they buy 
utility bonds or whether they make Farmer's loans. 

MR. PATMAN: I am thoroughly in accord with what you say, Governor, but the fact 
remains that they created the money, did they not? 

ECCLES: Well, the banks create money when they make loans and investments." 

On September 30, 1941, before the same Committee, Governor Eccles was asked by 
Representative Patman: 

"How did you get the money to buy those two billion dollars worth of Government securities 
in 1933? 

ECCLES: We created it. 

MR. PATMAN: Out of what? 

ECCLES: Out of the right to issue credit money. 

MR. PATMAN: And there is nothing behind it, is there, except our Government's credit? 

ECCLES: That is what our money system is. If there were no debts in our money system, 
there wouldn't be any money." 

On June 17, 1942, Governor Eccles was interrogated by Mr. Dewey. 

ECCLES: "I mean the Federal Reserve, when it carries out an open market 
operation, that is, if it purchases Government securities in the open market, 
It puts new money into the hands of the banks which creates idle deposits. 



167 



DEWEY: There are no excess reserves to use for this purpose? 

ECCLES: Whenever the Federal Reserve System buys Government securities in the 
open market, 

or buys them direct from the Treasury, either one, that is what it does. 

DEWEY: What are you going to use to buy them with? You are going to create 
credit? 

ECCLES: That is all we have ever done. That is the way the Federal Reserve System 
operates. 

The Federal Reserve System creates money. It is a bank of issue." 

At the House Hearing of 1947, Mr. Kolburn asked Mr. Eccles: 

"What do you mean by monetization of the public debt? 

ECCLES: I mean the bank creating money by the purchase of Government 
securities. All is created by debt—either private or public debt. 

FLETCHER: Chairman Eccles, when do you think there is a possibility of returning 
to a free and open market, instead of this pegged and artificially controlled financial 
market we now have? 

ECCLES: Never. Not in your lifetime or mine." 

Congressman Jerry Voorhis is quoted in U.S. News, August 31, 1959, as questioning 
Secretary of Treasury Anderson, "Do you mean that Banks, in buying Government 
securities, do not lend out their customers' deposits? That they create the money 
they use to buy the securities? ANDERSON: That is correct. Banks are different 
from other lending institutions. When a savings association, an insurance company, 
or a credit union makes a loan, it lends the very dollar that its customers have 
previously paid in. But when a bank makes a loan, it simply adds to the borrower's 
deposit account in the bank by the amount of the loan. The money is not taken from 
anyone. It is new money, recreated by the bank, for the use of the borrower." 

Strangely enough, there has never been a court trial on the legality or 
Constitutionality of the Federal Reserve Act. Although it is on much the same shaky 
grounds as the National Recovery Act, or NRA, which was challenged in Schechter 
Poultry v. United States of America, 29 U.S. 495, 55 US 837.842 (1935), the NRA was 
ruled unconstitutional by the Supreme Court on the grounds that "Congress may 
not abdicate or transfer to others its legitimate functions. Congress cannot 
Constitutionally delegate its legislative authority to trade or industrial associations 
or groups so as to empower them to make laws. " 

Article 1, Sec. 8 of the Constitution provides that "The Congress shall have power to 
borrow money on the credit of the United States . . . and to coin Money, regulate the 
value thereof, and of foreign Coin, and fix the Standard of Weights and Measures." 
According to the NRA deci- 

168 



sion, Congress cannot delegate this power to the Federal Reserve System, nor can it 
delegate its legislative authority to the Federal Reserve System to allow the System 
to fix the rate of bank reserves, the rediscount rate, or the volume of money. All of 
these are "legislated" by the Federal Reserve Board, meeting in legislative sessions 
to determine these matters and to issue "laws" or regulations fixing them. 

The Second World War gave the big bankers who owned the Federal Reserve 
System a chance to unload on the country billions of dollars printed early in 1930, in 
the biggest counterfeiting operation in history, all legalized by Roosevelt's 
government, of course. Henry Hazlitt writes in the January 4, 1943 issue of 
Newsweek Magazine: 

"The money that began to appear in circulation a week ago, December 21, 1942, was 
really printing press money in the fullest sense of the term, that is, money which has 
no collateral of any kind behind it The Federal Reserve statement that 'The Board of 
Governors, after consultation with the Treasury Department, has authorized 
Federal Reserve Banks to utilize at this time the existing stocks of currency printed 
in the early thirties, known as 'Federal Reserve Banknotes'. We repeat, these notes 
have absolutely no collateral of any kind behind them." 

Governor Eccles also testified to some other interesting matters of the Federal 
Reserve and war finance at the Senate Hearings on the Office of Price 
Administration in 1944: 

"The currency in circulation was increased from seven billion dollars in four years 
to twenty-one and a half billion. We are losing some considerable amounts of gold 
during the war period. As our exports have gone out, largely on a lend-lease basis, 
we have taken imports on which we have given dollar balances. These countries are 
now drawing off these dollar balances in the form of gold. 

MR. SMITH: Governor Eccles, what is the objective that the foreign governments 
are after in this projected program whereby we would contribute gold to an 
international fund? 

GOVERNOR ECCLES: I would like to discuss OPA, and leave the stabilization 
fund for a time when I am prepared to go into it. 

MR. SMITH: Just a minute. I feel that this fund is very pertinent to what we are 
talking about today. 

MR. FORD: I believe that the stabilization fund is entirely off the @OPA and 
consequently we ought to stick to the business at hand. " 

The Congressmen never did get to discuss the Stabilization Fund, another setup 
whereby we would give the impoverished countries of Europe back the gold which 
had been sent over here. In 1945, Henry Hazlitt, commenting in Newsweek of 
January 22, on Roosevelt's annual budget message to Congress, quoted Roosevelt as 
saying: 

"I shall later recommend legislation reducing the present high gold reserve 
requirements of the Federal Reserve Banks." 

169 



Hazlitt pointed out that the reserve requirement was not high, it was just 
what it had been for the past thirty years. Roosevelt's purpose was to free 
more gold from the Federal Reserve System and make it available for the 
Stabilization Fund, later called the International Monetary Fund, part of the 
World Bank for Reconstruction and Development, the equivalent of the 
League Finance Committee which would have swallowed the financial 
sovereignty of the United States if the Senate had let us join it. 



170 



CHAPTER FOURTEEN 

Congressional Expose 

"Mr. Volcker's politics is something of an enigma. "--New York Times 

Since 1933 when Eugene Meyer resigned from the Federal Reserve Board of 
Governors, no member of the international banking families has personally 
served on the Board of Governors. They have chosen to work from behind 
the scenes through carefully selected presidents of the Federal Reserve Bank 
of New York and other employees. 

The present chairman of the Federal Reserve Board of Governors is Paul 
Volcker. His appointment was greeted by one well-known economist with the 
following prediction, "Volcker's selection has been by far the worst. Carter 
has put Dracula in charge of the blood bank. To us, it means a crash and 
depression in the 80s is more certain than ever." 

Col. E.C. Harwood's Research Report, August 6, 1979, gave much the same 
view. "Paul Volcker is from the same mold as the unsound money men who 
have misguided the monetary actions of this nation for the past five decades. 
The outcome probably will be equally disastrous for the dollar and the U.S. 
economy. " 

Despite these gloomy views, the report from The New York Times on the 
selection of Volcker was positively ecstatic. On July 26, 1979, The Times 
commented that Volcker learned "the business" from Robert Roosa, now 
partner of Brown Brothers Harriman, and that Volcker had been part of the 
Roosa Brain Trust at the Federal Reserve Bank of New York, and, later, at 
the Treasury in the Kennedy administration. "David Rockefeller, the 
chairman of Chase, and Mr. Roosa were strong influences in the Mr. Carter 
decision to name Mr. Volcker for the Reserve Board chairmanship." The 
New York Times did not point out that David Rockefeller and Robert Roosa 
had previously chosen Mr. Carter, a member of the Trilateral Commission, 
as the presidential candidate of the Democratic Party, or that Mr. Carter 
would hardly refuse to appoint their choice of Paul Volcker as the new 
Chairman of the Federal Reserve Board. Nor is it straining the point to be 
reminded that this manner of selection of the Chairman of the Board of 
Governors is directly in the line of royal prerogative going back to George 
Peabody's initial agreement with N.M. Rothschild, to the Jekyll Island 
meeting, and to the enactment of the Federal Reserve Act. 



171 



The Times noted that " Volcker's choice was approved by European banks in 
Bonn, Frankfurt and Zurich." William Simon, former Secretary of 
Treasury, was quoted as saying "a marvelous choice." The Times further 
noted that the Dow market rose on Volcker's nomination, registering the best 
gains in three weeks for a rise of 9.73 points, and that the dollar rose sharply 
on foreign exchange@ at home and abroad. 

Who was Volcker, that his appointment could have such an effect on the 
stock market and the value of the dollar in foreign exchange? He represented 
the most powerful house of "the London Connection," Brown Brothers 
Harriman, and the London houses which directed the Rockefeller empire. 
On July 29, 1979, The Times had said of Volcker, "New Man Will Chart His 
Own Course". 

Volcker's background shows that this was nonsense. His course has always 
been charted for him by his masters in London. He attended Princeton, 
obtained an M.A. at Harvard, and went to the London School of Economics 
1951-52, the banker's graduate school. He then came to the Federal Reserve 
Bank of New York as an economist from 1952-57, economist at Chase 
Manhattan Bank, 1957-61, with Treasury Department 1961-65, as deputy 
under secretary for monetary affairs, 1963-65, and under secretary for 
monetary affairs, 1969-74. He then became President of the Federal Reserve 
Bank of New York from 1975-79, when Carter, at the behest of Robert Roosa 
and David Rockefeller, appointed him Chairman of the Federal Reserve 
Board of Governors. He was succeeded as President of Federal Reserve Bank 
of New York by Anthony Solomon, a Harvard Ph.D. who was with the OPA 
1941-42 and with the government financial mission to Iran 1942-46. He 
operated a canned food company in Mexico from 1951-61, was president of 
International Investment Corp. for Yugoslavia 1969-72 (a communist 
country), under secretary for monetary affairs at Treasury 1977-80. In short, 
Solomon's background was much the same as Paul Volcker's. 

The New York Times stated on December 2, 1981, "For years the Federal 
Reserve was the second or third most secret institution in town. The 
Sunshine Act of 1976 penetrated the curtain a trifle. The board now holds a 
public meeting once a week on Wednesday at 10 a.m., but not to discuss 
Monetary policy, which is still regarded as top secret and not to be discussed 
in public." The Times mentioned that when Open Market Committee 
meetings are held, Solomon and Volcker sit together at the head of the table 
and relay the instructions which they have received from abroad. 

Behind Volcker and Solomon stands Robert Roosa, Secretary of the 
Treasury in Carter's shadow cabinet, and representing Brown Brothers 
Harriman, the Trilateral Commission, the Council on Foreign Relations, the 
Bilderbergers, and the Royal Economic Institute. He is a trustee of the 

172 



Rockefeller Foundation*, and a director of Texaco and American Express 
companies. Dr. Martin Larson points out that "The international consortium 
of financiers known as the Bilderbergers, who meet annually in profound 
secrecy to determine the destiny of the western world, is a creature of the 
Rockefeller-Rothschild alliance, and that it held its third meeting on St. 
Simons Island, only a short distance from Jekyll Island." Larson also states 
that "The Rockefeller interests work in close alliance with the Rothschilds 
and other central banks."** 

On June 18, 1983, President Ronald Reagan ended months of speculation by 
announcing that he was reappointing Paul Volcker as Chairman of the 
Federal Reserve Board of Governors for another four year term, although 
Volcker' s term was not up until August 6, 1983. Reagan's reappointment of a 
Carter appointee puzzled some political observers, but apparently he had 
succumbed to considerable pressure, as indicated by a lead editorial in The 
Washington Post, June 10, 1983, "There is no one who matches Mr. Volcker 
in both political standing and grasp of the intricate networks that make up 
the world's financial system." The anonymous writer gave no documentation 
for his elevation of Volcker to the standing of the world's greatest financier, 
and as for his political standing, The New York Times commented on June 19, 
1983, "Mr. Volcker' s politics is something of an enigma." His "non-political" 
stance conforms with the Washington tradition of "the political 
independence of the Fed" which has been maintained for many years. 
However, the problem of its dependence on "the London connection" has 
never been discussed in Washington. 

In reality, Volcker is more of a politician than an economist. After attending 
the London School of Economics, and finding out who issues the orders of 
the international financial community, Volcker has ever since played the 
game. Not once has he failed to carry out the orders of the "London 
Connection". 

Can it really be possible that "The London Connection" exists, and that men like 
Volcker and Solomon receive their instructions, in however devious or indirect a 
manner, from foreign bankers? Let us look at the evidence, circumstantial, to be 
sure, but circumstantial evidence of the quality which has often sent men to the 
penitentiary or to the electric chair. John Moody pointed out in 1911 that seven men 
of the Morgan group, allied with the Standard Oil-Kuhn, Loeb group, ruled the 
United States. Where do these groups stand in the financial picture today? 

U.S. News published on April 11, 1983, a list of the largest bank holding companies 
in the United States by assets as of December 31, 1982. Number 1 is Citicorp, New 
York, with assets of $130 billion. This is Baker and 



* See Chart V 
** See Chart I 

173 



Morgan's First National Bank of New York, merged with National City Bank in 
1955, two of the largest purchasers of Federal Reserve Bank of New York stock in 
1914. Number 3, is Chase Manhattan, New York, with assets of $80.9 billion. This is 
Chase and Bank of Manhattan merged, the Rockefeller and Kuhn Loeb group, also 
purchasers of Federal Reserve Bank of New York stock in 1914. Number 4 is 
Manufacturers Hanover of New York $64 billion, also purchaser of Federal Reserve 
Bank of New York stock in 1914. Number 5 is J.P. Morgan Company of New York, 
$58.6 billion in assets and holder of considerable Federal Reserve Bank stock. 
Number 6 is Chemical Bank of New York, $48.3 billion also purchaser of Federal 
Reserve stock in 1914. And Number 11, First Chicago Corporation, the First 
National Bank of Chicago which was principal correspondent of the Morgan-Baker 
bank in New York, and which furnished the first two presidents of the Federal 
Advisory Council. 

The direct line which leads from the participants in the Jekyll Island Conference of 
1910 to the present day is illustrated by a passage from "A Primer on Money", 
Committee on Banking and Currency, U.S. House of Representatives, 88th 
Congress, 2d session, August 5, 1964, p. 75: 

"The practical effect of requiring all purchases to be made through the open market 
is to take 

money from the taxpayer and give it to the dealers. It forces the Government to pay 
a toll for 

borrowing money. There are six 'bank' dealers: First National City Bank of New 
York; Chemical Crop. Exchange Bank, New York, Morgan Guaranty Trust Co., 
New York, Bankers Trust of New York, First National Bank of Chicago, and 
Continental Illinois Bank of Chicago." 

Thus the banks which receive a "toll" on all money borrowed by the Government of 
the United States are the same banks which planned the Federal Reserve Act of 

1913. There is ample evidence demonstrating the present preeminence of the same 
banks which set up the Federal Reserve System in 1914. For instance, Warren 
Brookes writes on the editorial page of The Washington Post, June 6, 1983: 

"Citicorp (National City Bank and First National Bank of New York, merged in 
1955) just recorded an 18.6% return on equity, J.P. Morgan, 17%, Chemical Bank 
and Bankers Trust, nearly 16%, an exceptional rate of return." 

These are the banks which bought the first issue of Federal Reserve Bank stock in 

1914, and which owned the controlling interest in the Federal Reserve Bank of New 
York, which sets the interest rate and is the bank for all open market operations. 

These banks also profit steadily from the otherwise inexplicable fluctuations in 
monetary growth and interest rates. Brookes further comments on "actual 
monetary growth rates alternately gyrating from to 17% in successive six month 
periods for three recession-wracked years. The two measures of money growth most 
admired by Milton Friedman M2 and M3, 

174 

have actually shown little change on a year to year basis in the 1972-82 period." 



Thus we have money growth rates gyrating from to 17% but no actual year to 
year changes, which raises the question of why we cannot have stability of monetary 
growth throughout the year. The answer is that the big profits are made by these 
gyrations, and the next question is, who sets in motion these gyrations? The answer 
is "the London Connection". 

To draw attention from the continued control of the bankers and their heirs, who 
obtained the government monopoly of the nation's money and credit in 1913, the 
paid propagandists of the controlled media monopoly and academia are constantly 
trotting forth new and more exotic theories of economics. Thus James Burnham, 
one of the National Review propagandists, won fame with a ridiculous theory of 
"the managers". He postulated that the old arbiters of wealth, the J.P. Morgans, the 
Warburgs and the Rothschilds had, by 1950, disappeared from the scene, being 
replaced by a new class of "managers". This theory, which had no foundation in 
fact, served to obscure the fact that the same people still controlled the monetary 
system of the world. The "managers" were just that, executives like Volcker who 
were front men, paid employees who would continue to receive their paychecks only 
as long as they carried out their employers' instructions. Burnham remains a well- 
paid propagandist at the National Review, which many prominent leaders, including 
President Reagan, believe to be a "conservative" publication. 

From 1914 to 1982, a period in which many thousands of American banks went 
bankrupt, the original purchasers of Federal Reserve Bank stock have not only 
survived but they have consolidated their power. And what of "the London 
Connection"? Does it still exist, and is it still dictating the economic destiny of the 
United States? The Washington Post, May 19, 1983, carried a story datelined 
Nairobi, Kenya, noting the meeting of the African Development Bank. "The British 
merchant bank, Morgan Grenfell and a syndicate of the United States, Kuhn Loeb, 
Lehman Brothers International, the French Lazard Freres and Britain's Warburg 
are discreetly acting as financial advisors to about ten debt-plagued African states. " 

There are the same names we encountered in 1914, still managing the finances of the 
world, with profits for themselves but with disastrous results for everyone else. 
Perhaps we can look for relief to the present Administration of President Reagan. 
Unfortunately, before reaching him we have to run the gamut of the long list of his 
principal staff, composed of men from J. Henry Schroder, Brown Brothers 
Harriman, and other leading components of "The London Connection". 

Lopez Portillo, President of Mexico, in addressing the Mexican National Congress of 
Mexico in September, 1982, called the world credit boom of the past decade a 
financial pestilence akin to the Black Death which swept 



175 



Europe in the fourteenth century. "As in mediaeval times, it flattens country 
after country. It is transmitted by rats and it yields unemployment and 
misery, industrial bankruptcy and enrichment by speculation. The remedy 
prescribed by faith healers is forced inactivity and depriving the patient of 
food." 

Forbes Magazine stated October 11, 1982, "The world gasps for liquidity, not 
because the supply of money has contracted but because too much of it now 
goes to pay off old debts rather than fund new productive investments." 

The policy of high interest rates and tight money has been disastrous for the 
United States. In early 1983, a slight easing of money and credit promises 
some relief, but as long as the Federal Reserve system and its unseen 
manipulators continue their control of the money supply, we can expect more 
problems. The Nation on December 11, 1982, in commenting on economic 
problems, stated, "The blame for all this lies at the door of the Federal 
Reserve System working as usual on behalf of the international banking 
system. " 

The evidence of how the Federal Reserve System works on behalf of the 
international banking system is graphically illustrated by a series of charts drawn 
up by the staff of the Committee on Banking, Currency and Housing of the House of 
Representatives, 94th Congress, 2d session, August, 1976, "FEDERAL RESERVE 
DIRECTORS: A STUDY OF CORPORATE AND BANKING INFLUENCE".* We 
present as our Chart V page 49 of this study, showing the interlocking directorates 
of David Rockefeller. As our Chart VI we reproduce page 55 of this study, showing 
the interlocking directorates of Frank R. Milliken, one of the Class C Directors** of 
the Federal Reserve Bank of New York. In this chart are all the main personages in 
our story of the Jekyll Island conference: Citibank, J.P. Morgan and Company, 
Kuhn Loeb and Company, and many related firms. As Chart VII we reproduce 
page 53 of this study, showing the interlocking directorates of another Class C 
Director of the Federal Reserve Bank of New York, Alan Pifer. As President of the 
Carnegie Corporation of New York, he interlocks with J. Henry Schroder Trust 
Company, J. Henry Schroder Banking Corporation, Rockefeller Center, Inc., 
Federal Reserve Bank of Boston, Equitable Life Assurance Society (J.P. Morgan), 
and others. Thus an August, 1976 study from the House Committee on Banking, 
Currency and Housing, brings before us all of our main cast of personages, 
functioning today just as they did in 1914. 



* Due to space limitations, only five of the seventy-five charts in the study, all of which show the 
connections between prominent, powerful individuals with control in the Federal Reserve System have 
been selected to illustrate the connections between officers and directors of the twelve Federal Reserve 
Banks in 1976 and the firms listed in this book. 

** "The three Class C Directors are appointed by the Board of Governors as representatives of the 
public interest as a whole." p. 34, Congressional Study, 1976. 

176 

This 120 page Congressional study details public policy functions of the Federal 
Reserve District Banks, how directors are selected, who is selected, the public 



relations lobbying factor, bank domination and bank examination, and corporate 
interlocks with Reserve banks. Charts were used to illustrate Class A, Class B, and 
Class C directorships of each district bank. For each branch bank a chart was 
designed giving information regarding bank appointed directors and those 
appointed by the Board of Governors of the Federal Reserve System. 

In his Foreword to the study, Chairman Henry S. Reuss, (D-Wis) wrote: 

"This Committee has observed for many years the influence of private interests over 
the essentially public responsibilities of the Federal Reserve System. 

As the study makes clear, it is difficult to imagine a more narrowly based board of 
directors for a public agency than has been gathered together for the twelve banks 
of the Federal Reserve System. 

Only two segments of American society— banking and big business— have any 
substantial representation on the boards, and often even these become merged 
through interlocking directorates .... Small farmers are absent. Small business is 
barely visible. No women appear on the district boards and only six among the 
branches. Systemwide— including district and branch boards— only thirteen 
members from minority groups appear. 

The study raises a substantial question about the Federal Reserve's oft-repeated 
claim of "independence". One might ask, independent from what? Surely not 
banking or big business, if we are to judge from the massive interlocks revealed by 
this analysis of the district boards. 

The big business and banking dominance of the Federal Reserve System 
cited in this report can be traced, in part, to the original Federal Reserve 
Act, which gave member commercial banks the right to select two-thirds of 
the directors of each district bank. But the Board of Governors in 
Washington must share the responsibility for this imbalance. They appoint 
the so-called "public" members of the boards of each district bank, 
appointments which have largely reflected the same narrow interests of the 
bank-elected members .... Until we have basic reforms, the Federal 
Reserve System will be handicapped in carrying out its public 
responsibilities as an economic 

stabilization and bank regulatory agency. The System's mandate is too 
essential to the nation's welfare to leave so much of the machinery under the 
control of narrow private interests. 

Concentration of economic and financial power in the United States has gone too 
far." In a section of the text entitled "The Club System", the Committee noted: 

"This 'club' approach leads the Federal Reserve to consistently dip into the same 
pools — the same companies, the same universities, the same bank holding 
companies— to fill directorships." 



177 



This Congressional study concludes as follows: 

"Many of the companies on these tables, as mentioned earlier, have multiple 
interlocks to the Federal Reserve System. First Bank Systems; Southeast 
Banking Corporation; Federated Department Stores; Westinghouse Electric 
Corporation; Proctor and Gamble; Alcoa; Honeywell, Inc.; Kennecott 
Copper; Owens-Corning Fiberglass; all have two or more director ties to 
district or branch banks. 

In Summary, the Federal Reserve directors are apparently representatives of 
a small elite group which dominates much of the economic life of this 
nation." END OF CONGRESSIONAL REPORT. 



178 



Shares 


Percent 


438,831 


(6%) 


141,482 


( 2%) 


1,011,862 


(14%) 


544,962 


(8%) 


1,090,813 


(15%) 


127,800 


( 2%) 


37,493 


( .5%) 


509,852 


( 7%) 


655,443 


(9%) 


105,600 


( 2%) 



ADDENDUM 

As of 11:05 Tuesday, July 26, 1983, the list of member banks holding Federal 
Reserve Bank of New York stock includes twenty-seven New York City 
banks. Listed below are the number of shares held by ten of these banks, 
amounting to 66% of the total outstanding number of shares, namely 
7,005,700: 

Bankers Trust Company 

Bank of New York 

Chase Manhattan Bank 

Chemical Bank 

Citibank 

European American Bank & Trust 

J. Henry Schroder Bank & Trust 

Manufacturers Hanover 

Morgan Guaranty Trust 

National Bank of North America 

The tremendous number of shares held today as against the original 
purchases in 1914 is brought about by Section 5 of the original Federal 
Reserve Act which called for a member bank to buy and hold stock in the 
district Federal Reserve Bank equal to 6% of its capital and surplus. 

Currently, shares held by five of the above named banks comprise 53% of 
the total Federal Reserve Bank of New York stock. An examination of the 
major stockholders of the New York City banks shows clearly that a few 
families, related by blood marriage, or business interests, still control the 
New York City banks which, in turn, hold the controlling stock of the 
Federal Reserve Bank of New York. 

It is notable that three of the banks holding Federal Reserve Bank of New 
York stock, in the amount of 270,893 shares, are subsidiaries of foreign 
banks. J. Henry Schroder Bank and Trust is listed by Standard and Poors as 
a subsidiary of Schroders Ltd. of London. The National Bank of North 
America is a subsidiary of the National Westminster Bank, one of London's 
"Big Five". European American Bank is a subsidiary of the European 
American Bank, Bahamas, LTD. It is interesting to note that the directors of 
the European American Bank & Trust include Milton F. Rosenthal, 
president and Chief Operating Officer of the international gold company, 



179 



Engelhard Minerals and Chemical; Hamilton F. Potter, a partner in Sullivan 
and Cromwell (J. Henry Schroder Bank & Trust attorneys); Edward H. 
Tuck, partner of Shearman and Sterling (Citibank's attorneys); F.H. Ulrich 
and Hans Liebkutsch, managing directors of the giant Midland Bank of 
London, one of the "Big Five"; and Roger Alloo, Paul-Emmanuel Janssen, 
and Maurice Laure of the Societe Generale de Banque (Brussels, Belgium). 
[See Chart III] 

This information, derived from the latest issue of the tabulation available 
from the Board of Governors, Federal Reserve System, is cited as current 
evidence which indicates that the controlling stock in the Federal Reserve 
Bank of New York, which sets the rate and scale of operations for the entire 
Federal Reserve System is heavily influenced by banks directly controlled by 
"The London Connection", that is, the Rothschild-controlled Bank of 
England. [See Chart I] 



180 



APPENDIX I 

E.C. Knuth, in The Empire of the City, priv. printed, 1946, p. 27, refers to 
"the Bank of England, the full partner of the American Administration in 
the conduct of the financial affairs of all the world" and cites the 
Encyclopaedia Americana, 1943 edition. 

Barron cites Lord Swaythling, (April 8, 1923), "Lord Swaythling said, 
'Exchange can only be run from London. This is the center in Exchange.' " 
(They Told Barron, by Clarence W. Barron, founder of Baron's Weekly, 
Harpers, New York, 1930, p. 27.) 

Exchange, in the international financial world, means the transactions in 
money or securities, or simply, the "exchange" of the values of these 
securities. It is necessary that this "exchange" take place where the values 
can be established, and this place is the "City" in London. 

London was established as the primary center of exchange because of the 
"Consols" of the Bank of England, bonds which could never be redeemed, 
but which paid a stable rate of return. Henry Clews writes, in The Wall Street 
View, Silver Burdett Co. 1900, p. 255, "The Consolidated Act of 1757 
consolidated the debts of the nation of England at 3%, which were kept in an 
account at the Bank of England and is the great bulwark of its deposits. " By 
ostentatiously "dumping" "Consols" on the London Exchange after the 
Battle of Waterloo, in a pretended panic, Nathan Meyer Rothschild then 
secretly bought up the Consols sold in the panic by other holders at a low 
rate, and became the largest holder of Consols, and thus won control of the 
Bank of England in 1815. 

12% Dividends 

Although a Labor government nationalized the Bank of England in 1946, 
The Great Soviet Encyclopaedia points out (vol. I, p. 490c) that the Bank of 
England continues to pay 12% dividends per annum, just as it had done 
prior to the nationalization. The "Governor" is appointed by the 
government, in a situation similar to that in the United States, where the 
Governors of the Federal Reserve System are appointed by the President. 
However, as is pointed out in the Encyclopaedia Americana v. 13, p. 272, "In 
practice, the governors of the Bank of England have not hesitated to criticize 
and bring pressure on the government in public." 

Bank Rate 

The interest rate set by the Bank of England is known as "the Bank rate", 
and it is a controlling factor in interest rates throughout the world, 

181 



although rates in other countries may be higher or lower than this "Bank rate". The 
Bank of England manages the government debt, and is called upon to arbitrate in 
political affairs. It served as the intermediary with the Iran revolutionaries in 
negotiating for the return of the American hostages— a recent example. 

We should not be surprised that the present Governor of the Bank of England, Sir 
Gordon Richardson is a prominent international financial figure, who appears 
elsewhere in these pages because of his connection with the J. Henry Schroder 
@Wagg in London from 1962 to 1972, when he became Governor of the Bank of 
England. He was also director of J. Henry Schroder Co., New York, and Schroder 
Banking Corp., New York. He also serves as director of Rolls Royce and Lloyd's 
Bank. Although he resides in London, he maintains a home in New York, and is 
listed in the current Manhattan directory simply as "G. Richardson, 45 Sutton Place 
S.", although a prior listing showed him at 4 Sutton Place. Sutton Place was 
developed as a fashionable address for the international set by Bessie Marbury, 
whom we earlier cited for her connection with the Morgan family and the 
Roosevelts. 

The present directors of the Bank of England (1982) include Leopold de Rothschild 
of N.M. Rothschild & Sons, Sir Robert Clark, chairman of Hill Samuel Bank, the 
most influential bank after Rothschilds, John Clay, of Hambros Bank, and David 
Scholey, of Warburg Bank, and joint chairman of S.C. Warburg Co. 

Anthony Sampson writes, in "The Changing Anatomy of Britain", Random House, 
New York, 1982, p. 279, "The more cosmopolitan banks with foreign experts and 
directors, such as Warburgs, Montagus, Rothschilds and Kleinworts, had also 
discovered a huge new source of profits in the market for Eurodollars which began 
in the late fifties and multiplied through the 60s . . . British bankers themselves 
controlled relatively small funds, but they knew how to make money out of other 
people's money." 

The Eurodollar market, a new development in "created money" is monopolized by 
the above firms. 

Eurodollar Empire 

"Today, together with allies on the island of Manhattan (Britain's most important 
piece of real estate), the British Empire controls the entire $1.5 trillion Eurodollar 
financial market, another $300-$500 billion in the Cayman Islands, Bahamas, and 
$50-$100 billion in the Hong-Kong Singapore "Asia-dollar market". . . . Consider 
the $1.5 trillion Eurodollar market an "outlaw" market in the U.S. dollars over 
which this nation has no control. Here control and profits are overwhelmingly in the 
hands of London banks, who set the terms of lending and the interest rate on this 
mass of American dollars in relation to the London Interbank Borrowing 



182 



Rate (LIBOR) . . . U.S. banks like Citibank (New York City), on whose board of 
directors sits the powerful British financier, Lord Aldington, collaborate openly in 
this market. At the same time, British banks including the known central bank for 
the world's drug trade, the Hongkong and Shanghai Bank, pour into America to 
devour U.S. banks. In 1978 the Hongshang (Ed.— Hongkong and Shanghai Bank) 
took over New York's Marine Midland Bank, the state's 11th largest commercial 
bank. . . The British also control the creation of American dollars. While Federal 
Reserve Board Chairman Paul Volcker tightens credit against the domestic 
economy, British-controlled banks in the Cayman Islands (such as the European 
American Bank—Ed.) a British possession 200 miles off Florida, and in the 
Bermudas and a dozen other "free banking" computer terminals create hundreds of 
billions of American dollars. How is this done? There are no reserve ratios or other 
restrictions on the creation of dollar-denominated credits in the Empire's "free 
enterprise" banking. A $1 million bona fide credit coming from the United States 
can be turned into $20 to $100 million in dollar-denominated credits as it passes 
through the British system without reserve ratios."* 

Not only the financial power, but also the legal power, has remained seated in 
Britain. The Washington Post commented on June 18, 1983 that after the American 
Revolution, all the old laws remained in effect in the new United States: Some of 
these laws of "English common law" dated back to 1278, long before America was 
discovered. 

This enormous financial power of "the City" is revealed in many areas. Dean 
Acheson states, in "Present at the Creation", 1969, W.W. Norton, New York, p. 779, 
"We stayed at the embassy residence, the old J.P. Morgan mansion, 14 Prince's 
Gate, facing Hyde Park." How many Americans are aware that the U.S. Embassy 
residence in London is the J.P. Morgan home, or that Dean Acheson, a former 
Morgan employee, described himself as Secretary of State on p. 505, "My own 
attitude had long been, and was known to have been, pro-British." No one 
commented on an American Secretary of State's open bias in favor of England. 

The Federal Reserve "created" money is not used only for financial matters; this 
money is also used to maintain the bankers' control of every aspect of political, 
economic and social life. It is used to bankroll the enormous expenditures of political 
candidates, the swollen budgets of universities, the huge outlays required to start 
newspapers or magazines, and a vast array of foundations, "think-tanks" and other 
instruments of mind control. 

Psychological Warfare 

Few Americans know that almost every development in psychology in the United 
States in the past sixty-five years has been directed by the Bureau of Psychological 
Warfare of the British Army. A short time ago, 



* Harpers Magazine, Feb. 1980 



183 



the present writer learned a new name, The Tavistock Institute of London, also 
known as the Tavistock Institute of Human Relations. "Human relations" covers 
every aspect of human behavior, and it is the modest goal of the Tavistock Institute 
to obtain and exercise control over every aspect of human behavior of American 
citizens. 

Because of the intensive artillery barrages of World War I, many soldiers were 
permanently impaired by shell shock. In 1921, the Marquees of Tavistock, 11th 
Duke of Bedford, gave a building to a group which planned to conduct 
rehabilitation programs for shell shocked British soldiers. The group took the name 
of "Tavistock Institute" after its benefactor. The General Staff of the British Army 
decided it was crucial that they determine the breaking point of the soldier under 
combat conditions. The Tavistock Institute was taken over by Sir John Rawlings 
Reese, head of the British Army Psychological Warfare Bureau. A cadre of highly 
trained specialists in psychological warfare was built up in total secrecy. In fifty 
years, the name "Tavistock Institute' appears only twice in the Index of the New 
York Times, yet this group, according to LaRouche and other authorities, organized 
and trained the entire staffs of the Office of Strategic Services (OSS), the Strategic 
Bombing Survey, Supreme Headquarters of the Allied Expeditionary Forces, and 
other key American military groups during World War II. During World War II, 
the Tavistock Institute combined with the medical sciences division of the 
Rockefeller Foundation for esoteric experiments with mind-altering drugs. The 
present drug culture of the United States is traced in its entirety to this Institute, 
which supervised the Central Intelligence Agency's training programs. The "LSD 
counter culture" originated when Sandoz A.G., a Swiss pharmaceutical house 
owned by S.G. Warburg & Co., developed a new drug from lysergic acid, called 
LSD. James Paul Warburg (son of Paul Warburg who had written the Federal 
Reserve Act in 1910), financed a subsidiary of the Tavistock Institute in the United 
States called the Institute for Policy Studies, whose director, Marcus Raskin, was 
appointed to the National Security Council. James Paul Warburg set up a CIA 
program to experiment with LSD on CIA agents, some of whom later committed 
suicide. This program, MK-Ultra, supervised by Dr. Gottlieb, resulted in huge 
lawsuits against the United States Government by the families of the victims. 

The Institute for Policy Studies set up a campus subsidiary, Students for Democratic 
Society (SDS), devoted to drugs and revolution. Rather than finance SDS himself, 
Warburg used CIA funds, some twenty million dollars, to promote the campus riots 
of the 1960s. 

The English Tavistock Institute has not restricted its activities to left-wing groups, 
but has also directed the programs of such supposedly "conservative" American 
think tanks as the Herbert Hoover Institute at Stanford University, Heritage 
Foundation, Wharton, Hudson, Massachusetts Institute of Technology, and Rand. 
The "sensitivity train- 



184 



ing" and "sexual encounter" programs of the most radical California groups 
such as Esalen Institute and its many imitators were all developed and 
implemented by Tavistock Institute psychologists. 

One of the rare items concerning the Tavistock Institute appears in Business 
Week, Oct. 26, 1963, with a photograph of its building in the most expensive 
medical offices area of London. The story mentions "the Freudian bias" of 
the Institute, and comments that it is amply financed by British blue-chip 
corporations, including Unilever, British Petroleum, and Baldwin Steel. 
According to Business Week, the psychological testing programs and group 
relations training programs of the Institute were implemented in the United 
States by the University of Michigan and the University of California, which 
are hotbeds of radicalism and the drug network. 

It was the Marquees of Tavistock, 12th Duke of Bedford, whom Rudolf Hess 
flew to England to contact about ending World War II. Tavistock was said to 
be worth $40 million in 1942. In 1945, his wife committed suicide by taking 
an overdose of pills. 



185 



BIOGRAPHIES 



NELSON ALDRICH (1841-1915) 

Senator from Rhode Island; head of National Monetary Commission; his 
daughter Abby Aldrich married John D. Rockefeller, Jr.; he became the 
grandfather of his namesake. Nelson Aldrich Rockefeller, as well as the 
present David Rockefeller and Laurence Rockefeller. 

WILLIAM JENNINGS BRYAN (1860-1925) 

Woodrow Wilson's Secretary of State, three times losing presidential 
candidate of the Democratic Party, in 1896, 1900, and 1908, and head of the 
Democratic Party. 

ALFRED OWEN CROZIER (1863-1939) 

A prominent attorney in Grand Rapids, Cincinnati, and New York, Crozier 
wrote eight books on legal and monetary problems, focussing on his 
opposition to the supplanting of Constitutional money by the corporation 
currency printed by private firms for their profit. 

CLARENCE DILLON (1882-1979) 

Born in San Antonio, Texas, son of Samuel Dillon and Bertha Lapowitz. 
Harvard, 1905. Married Anne Douglass of Milwaukee. His son, C. Douglas 
Dillon (later Secretary of the Treasury, 1961-65) was born in Geneva, 
Switzerland in 1909 while they were abroad. Dillon met William A. Read, 
founder of the Wall Street bond broker William A. Read and Company, 
through introduction by Harvard classmate William A. Phillips in 1912 and 
Dillon joined Read's Chicago office in that year. He moved to New York in 
1914. Read died in 1916, and Dillon bought a majority interest in the firm. 
During World War 1, Bernard Baruch, chairman of the War Industries 
Board, (known as the Czar of American industry) asked Dillon to be 
assistant chairman of the War Industries Board. In 1920, William A. Read & 
Company name was changed to Dillon, Read & Company. Dillon was 
director of American Foreign Securities Corporation, which he had set up in 
1915 to finance the French Government's purchases of munitions in the 
United States. His righthand man at Dillon Read, James Forrestal, became 
Secretary of the Navy, later Secretary of Defense, and died under mysterious 
circumstances at a Federal hospital. In 1957, Fortune Magazine listed Dillon 
as one of the richest men in the United States, with a fortune then estimated 
to be from $150 to $200 million. 



186 



ALAN GREENSPAN (1926- ) 

In 1987, he was appointed by President Reagan to succeed Paul Volcker as 
Chairman of the Board of Governors of the Federal Reserve System. 
Greenspan had succeeded Herbert Stein as chairman of the President's 
Council of Economic Advisors in 1974. He was the protege of former 
chairman of the Board of Governors, Arthur Burns of Austria (Bernstein). 
Burns was a monetarist representing the Rothschild's Viennese School of 
Economics, which manifested its influence in England through the Royal 
Colonial Society, a front for Rothschilds and other English bankers who 
stashed their profits from the world drug trade in the Hong Kong Shanghai 
Bank. The staff economist for the Royal Colonial Society was Alfred 
Marshall, inventor of the monetarist theory, who, as head of the Oxford 
Group, became the patron of Wesley Clair Mitchell, who founded the 
National Bureau of Economic Research for the Rockefellers in the United 
States. Mitchell, in turn, became the patron of Arthur Burns and Milton 
Friedman, whose theories are now the power techniques of Greenspan at the 
Federal Reserve Board. Greenspan is also the protege of Ayn Rand, a weirdo 
who interposed her sexual affairs with guttural commands to be selfish. 
Rand was also the patron of CIA propagandist William Buckeley and the 
National Review. Greenspan was director of major Wall Street firms such as 
J.P. Morgan Co., Morgan Guaranty Trust (the American bank for the 
Soviets after the Bolshevik Revolution of 1917), Brookings Institution, 
Bowery Savings Bank, the Dreyfus Fund, General Foods, and Time, Inc. 
Greenspan's most impressive achievement was as chairman of the National 
Commission on Social Security from 1981-1983. He juggled figures to 
convince the public that Social Security was bankrupt, when in fact it had an 
enormous surplus. These figures were then used to fasten onto American 
workers a huge increase in Social Security withholding tax, which invoked 
David Ricardo's economic dictum of the iron law of wages, that workers 
could only be paid a subsistence wage, and any funds beyond that must be 
extorted from them forcibly by tax increases. As a partner of J.P. Morgan 
Co. since 1977, Greenspan represented the unbroken line of control of the 
Federal Reserve System by the firms represented at the secret meeting on 
Jekyll Island in 1910, where Henry P. Davison, righthand man of J.P. 
Morgan, was a key figure in the drafting of the Federal Reserve Act. Within 
days of taking over as chairman of the Federal Reserve Board, Greenspan 
immediately raised the interest rate on Sept. 4, 1987, the first such increase in 
three years of general prosperity, and precipitated the stock market crash of 
Oct., 1987, Black Monday, when the Dow Jones average plunged 508 points. 
Under Greenspan's direction, the Federal Reserve Board has steadily nudged 
the United States deeper and deeper into recession, without a word of 
criticism from the complaisant members of Congress. 



187 



COLONEL EDWARD MANDELL HOUSE (1858-1938) 

Son of a Rothschild agent in Texas. Succeeded in electing five consecutive governors 
of Texas; became Woodrow Wilson's advisor in 1912. Cooperated with Paul 
Warburg to get the Federal Reserve Act passed by Congress in 1913. 

ROBERT MARION LAFOLLETTE (1855-1925) 

Served in Senate from Wisconsin 1905-25. Led agrarian reformers in opposing 
Eastern bankers and their plans for the Federal Reserve Act. Ran for President in 
1924 on Progressive-Socialist ticket. 

CHARLES AUGUSTUS LINDBERGH, SR. (1860-1924) 

Congressman from Minnesota (1907-1917) who led the fight against enactment of 
the Federal Reserve Act in 1913. He served until 1917 when he resigned to run for 
governor of Minnesota. He ran a good campaign despite adverse newspaper attacks 
led by The New York Times. His campaign was adversely affected when Federal 
agents burned his books, including Why Is Your Country At War? and the papers 
and contents of his home office in Little Falls, Minnesota. 

LOUIS T. McFADDEN (1876-1936) 

Congressman and Chairman of the House Banking and Currency Committee, 1927- 
33; courageously opposed the manipulators of the Federal Reserve System in the 
1920's and the 1930's. Introduced bills to impeach Federal Reserve Board of 
Governors and allied officials. After three attempts on his life, he died mysteriously. 

JOHN PIERPONT MORGAN (1837-1913) 

Considered the dominant American financier at the turn of the century. Who's Who 
in 1912 stated he "controls over 50,000 miles of railroads in the United States." 
Organized United States Steel Corporation. Became representative of House of 
Rothschild through his father, Junius S. Morgan, who had become London partner 
of George Peabody & Company, later Junius S. Morgan Company, a Rothschild 
agent. John Pierpont Morgan, Jr. succeeded his father as head of the Morgan 
empire. 

DAVID MULLINS (1946- ) 

Appointed Governor of the Federal Reserve Board May 21, 1990, David Mullins' 
term runs to Jan. 31, 1996. He was recently nominated to serve as Vice Chairman of 
the Federal Reserve Board, and served as Assistant Secretary of the Treasury for 
Domestic Finance 1988-90, receiving the department's highest award, the Alexander 
Hamilton Award, for his service in such programs as synthetic fuels, federal finance, 
Farm Credit Assistance Board, and author of the President's Plan for rescuing 
the savings and loan institutions. He is a distant cousin of the author, 
descended from John Mullins, the first recorded settler in the western area of 
Virginia, hero of the battle of King's Mountain, and recipient of a 200 acre 
grant of land for his service in the American Revolution. 

188 



WRIGHT PATMAN (1893-1976) 

Congressman and Chairman of the House Banking and Currency Committee 
1963-74. Led the fight in Congress to stop the manipulators of the Federal 
Reserve System from 1937 to his death in 1976. 

CONGRESSMAN ARSENE PUJO 

Served in Congress 1903-1913. Democrat from Louisiana. Chairman of 
House Banking and Currency Committee. Chairman of "Pujo Hearings" 
Subcommittee, 1912. 



SIR GORDON RICHARDSON (1915- ) 

Head of the Bank of England since 1973. Chairman J. Henry Schroder 
Wagg, London, 1962-72; director of J. Henry Schroder Banking 
Corporation, New York; Schroder Banking Corporation, New York; Lloyd's 
Bank, London; Rolls Royce. 

JACOB SCHIFF (1847-1920) 

Born in Rothschild house in Frankfurt, Germany. Emigrated to United 
States, married Therese Loeb, daughter of Solomon Loeb, founder of Kuhn, 
Loeb and Co. Schiff became senior partner of Kuhn, Loeb and Co., and as 
representative of Rothschild interests gained control of most of railway 
mileage in United States. 

BARON KURT VON SCHRODER (1889- ) 

Adolph Hitler's personal banker, advanced funds for Hitler's accession to 
power in Germany in 1933; German representative of the London and New 
York branches of J. Henry Schroder Banking Corporation; SS Senior Group 
Leader; director of all German subsidiaries of I.T.T; Himmler's Circle of 
Friends; advisor to board of directors, Deutsche Reichsbank (German 
central bank). 

ANTHONY MORTON SOLOMON (1919- ) 

Educated at Harvard, economist Office of Price Administration, 1941-42; 
financial mission to Iran, 1942-46; Agency for international Development 
South America, 1965-69; president international Investment Corporation for 
Yugoslavia 1969-72; advisor to Chairman, Ways and Means Committee, 
House of Representatives, 1972-73; Undersecretary Monetary Affairs, U.S. 
Treasury, 1977-80; president Federal Reserve Bank of New York, 1980- 



189 



SAMUEL UNTERMYER (1858-1940) 

A partner of the law firm of Guggenheimer and Untermyer of New York, who conducted the 
"Pujo Hearings" of the House Banking and Currency Committee in 1912. Counsel for 
Rogers and Rockefeller in many large suits against F. Augustus Heinze, Thomas W Lawson 
and others. Earned a single fee of $775,000 for handling merger of Utah Copper Company. 
Reported in The New York Times May 26, 1924 as urging immediate recognition of Soviet 
Russia at Carnegie Hall meeting. Untermyer's prestige and power is illustrated by the fact 
that this front page obituary in The New York Times covered six columns. His listing in 
Who's Who was the longest for thirteen years. 

FRANK VANDERLIP (1864-1937) 

Assistant Secretary of Treasury 1897-1901; won prestige for financing Spanish American 
War by floating $200,000,000 in bonds during his incumbency for what is known as 
"National City Bank's War" President of National City Bank 1909-19. One of the original 
Jekyll Island group who wrote Federal Reserve Act in November, 1910. No mention of this 
important fact is made in extensive obituary in The New York Times, June 30, 1937. 

GEORGE SYLVESTER VIERECK (1884-1962) 

Author of the definitive study The Strangest Friendship in History, Woodrow Wilson and 
Col. House, Liveright, 1932. A leading poet of the early 1900's, reviewed on the front page of 
The New York Times Book Review, and known as the leading German-American citizen of 
the United States. 

PAUL VOLCKER (1927- ) 

Chairman of the Federal Reserve Board of Governors since 1979, appointed by 
President Carter, reappointed by President Reagan for another four year term 
beginning August 6, 1983. Educated at Princeton, Harvard and London School of 
Economics; employed by Federal Reserve Bank of New York, 1952-57; Chase 
Manhattan Bank, 1957-61; Treasury Department, 1961-74; president Federal 
Reserve Bank of New York, 1975-79. 

PAUL WARBURG (1868-1932) 

Conceded to be the actual author of our central bank plan, the Federal Reserve 
System, by knowledgeable authorities. Emigrated to the United States from 
Germany 1904; partner, Kuhn Loeb and Company bankers, New York; naturalized 
1911. Member of the original Federal Reserve Board of Governors, 1914-1918; 
president Federal Advisory Council, 1918-1928. Brother of Max Warburg, who was 
head of German Secret Service during World War I and who represented Germany 
at the Peace Conference, 1918-1919, while Paul was chairman of the Federal 
Reserve System. 

SIR WILLIAM WISEMAN (1885-1962) 

Partner of Kuhn, Loeb and Company; head of British Secret Service during World 
War I. Worked closely with Col. House dominating the United States and England. 



189 



Blank Page 



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193 






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193 



INDEX 



Abfc.it, Lawrence— 11 
Adams, John Qutncy— 4B 
Aldiith. Nelson-]. 2. 3, 6, 7 r 8. 9, 

10,11, 1», 21, 22 JO, 33, 3* 
AJdikh-Vteetand Emergency 

Currency BilM2, *?, 20, 22 
Alien, W.H--3J 

American Awept*™^ Council— 126 
Amciiim Banker* Awodarion— 13, 

127 
Amwkan Relief 

Admin IflrrariDii— 74. 78 
Andrew, A. Pian — I 
Asor, John Jatcih — 64. 65 
AuehLncLow, Gordon— 107 

B 

Bsgdfkian, Ben H^-Gl 

Baksf, Gangs 1^16, 42, 43 1 47, 66, 

67 
Raker, George F, Jfr-fti 
Bank cfBniibnd-lZ, #.51.51. 

58, 59, 66, 69, 80, 123. 129, 

131, m, 142, 146, ISO 
Bank of France— 31, 135 
Banking Act of 1995-29, 139 
Bamee, Julius— 73, 74 
Ban™, Clarence W.-30 
Baruch. BernanJ-17, 26, 15, 74, 

66. 89, 90, 94, 99, 109. Ill, 

112, 139, 147, 131 
Bec'htnl ( A-.r^MaEJori— 77 t j[9 
Belgian Relief t^flwiil3&Jon-^9, 70, 

12.73,74,78.83 
Eklmanr, August— 53 
Biddlc, Nicholas-6, 50 
BilderfxrBcn-54. 172 
Bletehpoder., Samuel— 59 
Biumentnd, Geoi^e— 14 



Brarafcis, Rustic* Lcwii— 87, 109 
BristOw, Straw— 3£ 
BiwUiirt. Senarcn— 117 
B*Otvn, Alexander— 49 
Alex Bwwn Sl Scn-49 
Biowti Brorhm Bankei5*--2l, 49", 

131 
Brown Brothers Harfinwn— It, 46s 

49, 61, «, 79, 131, 171, 172, 

Brown Shipley & Company-49, 68 

BrfBTl, William Jiniiirtjp— 26, 29, 

&,&, 11B 
Bull Moose Pairy— 13 
Bvjh, George— 49 

Suih r PrcetoiE— 49 
Byrnes, James— 17 



Canaris, Admiral — 62 

Can, William G«y— S3.. 55 

Carrey Jimrtty-E7l, 172, 173 

Cassel, Ernest— 59 

Cavell, Edilh-72, 73 

Central Bank— 5 

ChimbcrLain, Neville— 7S 

Churchill. Winston— 78. C3 

Clark, Champ— 29 

Clay, John— L&2 

Clews, Henry-^D 

C*jfWt; Kenr— 60 

Council cm foreign Relations— 35, 

54, 81, 172 
CnssLngei, t),Rr"l4l 
CTtrnwreU. Oliver— 58 
Ckkis, AUred-ZQ 

D 

Dabfier. Charles H.-5Q. 51 

Davison, Daniel • S3 



•94 



Davison, Henry R-l, 2- *, 3J. 43, 

44, 6*. i03 
Dehs,Eufl«tw^L05 
Delano. FA^tf, 114 
Dclscwi, T*forwn — 36 
Dodge, Cleveland Hz-103, 105, 
Dracel, Anthony— 5:3 
Dnmel -Si Company— 43, 54 
Dulles, Allen-62,75. 76 
Dulles, John Faster— 75. SI 
Duncan SherrftOT Coanpairpf*— 50 



B 

Eceha, Marrincr-122, 126, 159, 
' 162. 163, 1164, 167, 168, 169 
Elsenhower, Dwirf". Dt-75, 61 
ELle-Ty, William— 4B 
Eraden, Aul— 36, 60 



Fsdetal AdvisoiY Council— 6. 19. 
40,43. 42,43,44,45, 613, 116, 
117, 119, 12B, 129, 144 

Federal Reserve Acc-7, 9, L5, 16, 
IB, 19, 21,23. 26. 27.29,29, 
30, 31. 3 J. 34,35,40,45.64, 
32. 125, 126, 139, 162, 168, 171 

Federal Reserve Banks— 6, 8, 34, 35, 
40,41,44,63 

Federal Reserve Board, of 

Governors— 6. 14. 19, 23, 29, 
31,32. 34, 35, 36,37. 36.39, 
41,42.44,45,64,68.74,86, 
87.95, 112, 119, 124, 125, 126, 
128. 129, 133, 139, 140. 143, 
144. 145, 146, 149. 154. 157, 
159, 161. 163, 1*5, 169, 171. 
172. 180 

Federal Reserve System— 5, 6, 7, &, 
19, 21, 2?, 3D, 32, 33, 35. 40, 
41,42,42.63.67.82,84, \\\ 
114, 115, IIS, U9, 120, 121, 
122. 117, UB, 132. 134, 13*. 
140, 141, 143. 146. 15B, 162, 
163, 164, 165, 166, IS*, 160, 
170, 176, ISO 



Ferdinand. Archdriilrt— 69 

Flisr Name Club— 3, B, 13 

Firai National Bank of NY— I. 34. 

41,42,44.47,64,66,67 
Iforbes, B.G^-2, 7 
Rarfee*, Malc«lrn — 2 
Rjn^n, James tUl, 42 
Frame. Andrew^ 1 3, 14 
Fran«ni&, Emile-69, 70, 71. 72 



Garfield, Jsm*s. A.-1Q 
Garrison, Col Ely— 22, 23, 120 
Gate*, Thomas Sr-48 
Glass, Csrter-13, 14, 19, 21, 22, 

29. 30,34,40.45, 1 14. 116. 

117, 138, 160 
GLasfrSnssgftH Banking Act— 359 
GotderWW'isw, Emanuel — US, 136, 

L46. 148 
Grattam, Katnerine— 97 
Giay. Premiss— 73, 7-8 
Guggenheim— 90 

K 

HftmUL, John-69. 70 
HmnihcA, Alestander— 5 
Hamlin, Charlw S--36, 129. 138 

L47 
Hanauer, jemme J^B7, 95, 99 
Hauling, W-PO-36, 103, lit, 157 
Harriman, E.H— 67, 90 
Harriman, Mary — 67 
Harrison, George L^132 
Herrick, Myiw T=-H7 
Hess. Rudolf-7rJ 
Hill,Janie»^l7 
Hiss, Alger-24, 83 
Hiss, Donald— 24 

Hitler, AdoSf-75, 76, 77, 78 P 79. Bl 
Hc<rw*t, HerbenjHi-69, 70. 71. 72, 

73. 74. ;8. 139. 149. 150. 15s, 

158 
Houie, CoL Bdwant Mandel— 21, 

23. 24, 25, 26, 27, 29, 30. 31, 

M. 79. AS.. 107, 109, 111 
Hull. Cordell-84 



195 



I 

[ntemationil A«epnn« 

Banfc-125, 144 
hnsulL. Samiwl*-148 

J 
Jaetsan,, Andrew— 5, SO 
Jeffrey CT--43 
James, F, Cyfil-42 
Jefferson, TTwmas— 5, 7, 35 
Jekfll bland-l. 1, 4. 5, 8, 9, ». 
U, 12, 20, 29, 33, 41, 44, 1? I 
JekyU Island CluM 
Wt, Tfemas D-36, 38, » 
loseptuon, Matthe*-#. $7 
JuiELui A.D-67 



Kahn» Ono-19 t 38, «, 107 

Kains, Adltold-43 

Kaiping Co&l Wines— 70 

Kmuntrtr. E.W-85. 124 

Kjcueci, ke-71. 146, 149 

Kuhfl. loebCnmpanv^li H, 18, 21 
33, 35, 3* r 37, 3B, 39, 41, 44, 
47, ^,*l, 66, 67, 71, 71, 74, 
81,^85. 06,87,83,89, 99, 
KJl, 1QJ, 119, 117. 128, m 
174, 115 



Lafollene, Senator Robert Mi-16, 
17, 18 

LuiKmc, TWW, 109, IU, 12B 
laughlm, J. Lawrence— ID, 11. 33 
lwd Fceres-14, 34, 53, «!, 68, 74. 

76, 94, 99, IS 
league oFNafcr[ti-l3:&, 113, 170 
LeguLa, Juan-- 155 
L' .M. An, Herbert— 101 
Lehman Bmhen-35, 66, 101, 175 
Uncob, Abraham— 20, 65 
LlmibeiEk Crudes A., SHI, 16. 

17,18,28,112 
Uxb, Sdomori— 33 
Uiv«h, Rnhficr— 48 
Lundbtrg, Fttdifland— J2 

^ go 



M 

Manait Sugar Corporation^, 80, 

ai 

Marbury, Bewi? — 155 

Marlnoe, jsmes-131 

Marshall, Louis— 29 

Vj;i:rir\ William McChf^rt-lcJ 

McActw, William- 19, II, 2*,. I», 

J2. 39, 99, 101, 114 
Mtftddm. Louis— 71, 72,. 74, 75i 

95. 127, ill H3, 134, 135, 

136, 137, 150. 151, 152, 153, 

[54 
Mcintosh, I.WH03 
Mellon, Andrew-142. 147, 150 
Meyer, EnKM-U. 17, 34, 61, 72. 

74,75,94,95.99, 118, 122, 

150, 1S1. 152, 153, 159, 171 
Miller. Adolph C^36, 129, 133, 

134, 135, 136, 157, 16* 
Mlnsky— 67 

Money Tnifl-ll, 12. 16 
Montague, Sftmuel &, Ccr>3S, 63 
Moody, Jefan-41 52 
NwKffn. GittiteU C«np?ny-63 r 68 
Moijfan Hanes Cwnpofty— 54 
Morgan, J,R-t, L \ 10, 16, 17, 18, 

26, 32, 35, 41. 12, 43, 44. 47, 

48, 49, 50, II. 52, S3, 54, 66, 

67 r 75, 83, 101, 129, 146, 150, 

160, 174, 176 
Morgan, It. Company— 1, 33, 35, 

41, 47. IS, 53, 66. 123. 148, 

174 
Morgan, Joseph— 51 
MoflgMl, Junius Sa-B, 51, 53, 65, 

66 
Mortem, Frsdenc— 56 
Morton, Lsvl Rr-67 
Mountbarttm, PhiHp-60 

N 
Napoleon de Bonaparte— 57 
Nation, Tne-12. 16, 19, 30, 37 
Narlonal Bank Art dl 1864-125 
National Ciirren's L*Mu*— 10, H 
National CitrBank-ll, 33, 34, 41. 

64,65,66, 112, 126, 127 
National Monetary Commission— I, 



1% 



4, 5, JO. 11, U, 13, 14. 15,33, 

124, 125 
SaTMJf*aJ Recovery Act — 159, 168 
National fLesenw Plan— 7 
New Iforlf Tunes— 27, 28. 29. 33, 

35, 37. 40, 44, 61, IS, 74, 75, 

SO, 112, 119, 326 r 144, 1156, 171 
Sjmiflrt, Limi Moaitaftu, — 49, 76, 

77, 123, 12S. 131, 132, 133, 

142, 150 
NSorren. Charles &-1. J3 



OOofman, Senator— 14, 38 

Own, Rc*wt IU-17. 19, 59, 38s 39 r 

40, 41, 116, 119. 136, 157, 161 
Ovrert^jlasa BUI— 21 



Page, Salter HimeB— S3 
fan.Lt of 1837—5, 50. 51. 65 

Panic of 1857—51, SI, 65 
Panic of 1907-1. 2, 5, 10, 12, 21 
Paterscn, William.— 59, 59 
Patman, Wright- 34, 164, 165, 167 
Fteabod*, Geoi&&— 49, 50, 51, S2, 

54,65, 171 
Pfeahody. FUffip & C&-49 
Ptagl' 1 '. Weathrook — 23 
Pemberron, Robert Leigh — 80 
Ptjund, Rtra— 58 
Pressman, Lee— 24 
Prince^*, G*>rel— 69 
PuJch A Bene — 16 
PujQ. 0)«uitl«ee— 16, 17, 18, 14° 
Pyne, M. rises Tkylor-^66 
Pyne* P*rcy-65, 66 



Quijdey, Dt Cartel— 53, 131 



Reagan, Ranald— 77, 79, 80, 173,, 

175 
ftjHthihanL:— \2. 132 
Rhodes, Cecil— 53 



Rlchmds*n, Sir Cardan — 80 
JUekarcL, Edgar— 74 
Rionda, M-Et-7J 
Rockefeller. David— ] 71, 172, 176 
Rockefeller, John D^— 47. 65 
RosfceJelltr. WdltLaawt-^7, o5 
R^Juefellej. Wizard Jt-65 
Kixwa, Rabsn— 54, 171, 172 
KodscvcLc Pranldui Delano— 23, 2.4. 

30, 31, 84, 129, 137, 139. 145. 

t51, 155. 156. 158, 159. 162, 

169, 170 
Recaevelt, Theodore— '. IS, 1°, 22, 

Rosebury, Lord: — 53 

tteduchUd. Baron Alfred— 23, 60 

Rothschild. Houie at— 17. 47, 48. 

50,52.53, 54, 60 
Rothschild, Jamey-5, 50, 57, 59, 

61, 66, 109 
Rrtfhsehlld, LeopoW^oO 
Rothschild, Mayer Amsehel— 55, 56 
Ruttwchild, N.M^4S, 49, 51, 53, 

5 7,5ft, 5y, 6S, 1?1 
Round Tablt-53, 54. 62 
Rowe, W.S^-43, ?0 
Rue, Levi L^f2 
Ryan, John Baity— 66 
Ryan, Thorns* Fdrrune — 66 
Ryan, Virginia Kortiuic 66 

S 

Sdiiff, Jacob— 17. 19, 26, 29, 47, 

47,66,67,86,87,90, 149 
Schiff, John — 66 
Schiff, Ludwtg— 87 
Schiff, Philip— H7 
Schoeltkapf RurtLly— 34 
SchoGey, David— 182 
Schroder, Baron Beiino 'Wjci — 69, 76 
iSctwuder, Baion Rudolph \fon — 76 
Schroder, j. Henry Co^8, 67, 68, 

69,71, 73, 74, 75,76, 77, 7$. 

79, 80, 81, 175, 176, 179, 160 
SchuJn. Oetwge— 79 
Sclipcian, E.R.A— 9 
^e-liKmioi, |. 5* W^-9, 17, 71, 109, 

114. 155 



197 



Stymour, Charle* — Jl 

Sh&is Le*tLe*- 14 

Shdton— I, I 

Simpson, John Lowery— 78 

Smith, RLioey-29, 111 

Sonrag, Susan — 6i 

SpragutO.M.W:-]]. [[4. E6i 

Spring^Rke, Sir Cecil — 89 

St, George, Ceonje Ev-66 

St, GcotsCi Kathcrine— 66 

S«irl ing, John W-66 

StUliMn, Don Carlo*— 65 

ricillman, Jaines.— B, 47, 65, 66 

Selmson. Haify L— L61 

Scone, Senator— 21 

Strauss, Albm-UJ, 114, 12 2, 140, 

141, 157 
Strong, Benjamin—], 3, 32, J J, 44, 

116, 123, 119, 131, 132, 133, 

13?, 138 
Sugar EtLusliPH Ion Board— 74 



Tait, William Howard-IB-, 19, 38, 82. 

TaylniE; Congressman— 14 

Taylor. H.A.C^56 

Tsi'kir, Mcse5^64, 65, 66 

Tawisfock Institute— 80, I&4, IS5 

Thalmarm, Ladenbuiig^ 17 

Tiarka, Fiank Cjfil-o9, 73, 76, 77 

Tientsin Railroad— 72 

Tobacco Trust — 69 

Trilateral Com miss lun— 35, 54, ]72 

Tijpwell, Rexfard Guy— 161 

U 
Unterrnqprr, Samuel— 17, 16 
US Food Admtftlsmrion— 73, 74, 
78, 87 



Vidoers Sorts &l Masdm— 60 
ViMKt, GeotBc-I3, 25, 27 
Vfckter, A.J-H 171, 172, 173, 

183 
V«elaad, Edward— 12 

W 
Tflfei Ffcian « CorpOrfarwrt— 24, 86, 

94,95,97,99. 154, 153 
IB&i Industries Boid-74, 86, 90, 

351 
Warburg, Felix- 38, 86. B7, 128, 

129 
WBihuig, James Paul~L28, 129, 156, 

Warburg, M-M- Company— 12, 17, 
34 54 

Waiburg, Mh-34, 86, 67, 88, 111 

WmbuiE, Paul Meritt-1, 2, 3. 4, 5, 
6, 7, 8, 9. 12. 14, 19, 21, 22. 
13, 24. 26, 28. 29, 30, 33, 34, 
36, 37, 38, 40. 41. 42, 41. M, 
46,66,?], 74, 84. 66,87,. 6B, 
£9,99, 1U, L12, 115, 117. 119. 
1Z0, 122, 126, 127, 128. ]38, 
144, 148, 156, 157, 164 

Weinberger, Caspar— 79 

Wetrnunj, Ftahl* Qr-4Z 

Whire, Hart? Dexter— 24 

WiJIiams, jorm Sfcehon-21, 32, 39, 
101, 103. 140 

Wi]lu, H. PaiLer-132, 1+0, 142 

Wilson, Woodru*-lO, 17, 16, 19, 
2Z, 23, 24, 25, 26, 28, 29, 30, 
32,36, 36, 39, 4], $2,83, 64, 
B5. 86, 87, 88, 89, 90, 99, 101, 
103, 105, 107, 309, III- 1 12. 
117, 137, 139. ]40, 141. 156 

Wlnfl. Daniel S^»3 

Wiseman, Sir Wi]]iam"73, 68, 105, 
107, III 



V 

Vmderlip, Fiank-I, 2, 3, 8, 9, 1*. 
33,44,161 



Zabnulie, C-A-73, 74 



196 



Questions and Answers 



While lecturing in many countries, and appearing on radio and television 
programs as a guest, the author is frequently asked questions about the 
Federal Reserve System. The most frequently asked questions and the 
answers are as follows: 

Q: What is the Federal Reserve System? 

A: The Federal Reserve System is not Federal; it has no reserves; and it is 
not a system, but rather, a criminal syndicate. It is the product of criminal 
syndicalist activity of an international consortium of dynastic families 
comprising what the author terms "The World Order" (see "THE WORLD 
ORDER" and "THE CURSE OF CANAAN", both by Eustace Mullins). The 
Federal Reserve system is a central bank operating in the United States. 
Although the student will find no such definition of a central bank in the 
textbooks of any university, the author has defined a central bank as follows: 
It is the dominant financial power of the country which harbors it. It is 
entirely private-owned, although it seeks to give the appearance of a 
governmental institution. It has the right to print and issue money, the 
traditional prerogative of monarchs. It is set up to provide financing for 
wars. It functions as a money monopoly having total power over all the 
money and credit of the people. 

Q: When Congress passed the Federal Reserve Act on December 23, 1913, 
did the Congressmen know that they were creating a central bank? 

A: The members of the 63rd Congress had no knowledge of a central bank or 
of its monopolistic operations. Many of those who voted for the bill were 
duped; others were bribed; others were intimidated. The preface to the 
Federal Reserve Act reads "An Act to provide for the establishment of 
Federal reserve banks, to furnish an elastic currency, to afford means of 
rediscounting commercial papers, to establish a more effective supervision of 
banking in the United States, and for other purposes. " The unspecified 
"other purposes" were to give international conspirators a monopoly of all 
the money and credit of the people of the United States; to finance World 
War I through this new central bank, to place American workers at the 
mercy of the Federal Reserve system's collection agency, the Internal 
Revenue Service, and to allow the monopolists to seize the assets of their 
competitors and put them out of business. 

Q: Is the Federal Reserve system a government agency? 

A: Even the present chairman of the House Banking Committee claims that 
the Federal Reserve is a government agency, and that it is not privately 
owned. The fact is that the government has never owned a single share of 



Federal Reserve Bank stock. This charade stems from the fact that the 
President of the United States appoints the Governors of the Federal Reserve 
Board, who are then confirmed by the Senate. The secret author of the Act, 
banker Paul Warburg, a representative of the Rothschild bank, coined the 
name "Federal" from thin air for the Act, which he wrote to achieve two of 
his pet aspirations, an "elastic currency", read (rubber check), and to 
facilitate trading in acceptances, international trade credits. Warburg was 
founder and president of the International Acceptance Corporation, and 
made billions in profits by trading in this commercial paper. Sec. 7 of the 
Federal Reserve Act provides "Federal reserve banks, including the capital 
and surplus therein, and income derived therefrom, shall be exempt from 
Federal, state and local taxation, except taxes on real estate. " Government 
buildings do not pay real estate tax. 

Q: Are our dollar bills, which carry the label "Federal Reserve notes" 
government money? 

A: Federal Reserve notes are actually promissory notes, promises to pay, 
rather than what we traditionally consider money. They are interest bearing 
notes issued against interest bearing government bonds, paper issued with 
nothing but paper backing, which is known as fiat money, because it has only 
the fiat of the issuer to guarantee these notes. The Federal Reserve Act 
authorizes the issuance of these notes "for the purposes of making advances 
to Federal reserve banks... The said notes shall be obligations of the United 
States. They shall be redeemed in gold on demand at the Treasury 
Department of the United States in the District of Columbia." Tourists 
visiting the Bureau of Printing and Engraving on the Mall in Washington, 
D.C. view the printing of Federal Reserve notes at this governmental agency 
on contract from the Federal Reserve System for the nominal sum of .00260 
each in units of 1,000, at the same price regardless of the denomination. 
These notes, printed for a private bank, then become liabilities and 
obligations of the United States government and are added to our present $4 
trillion debt. The government had no debt when the Federal Reserve Act was 
passed in 1913. 

Q: Who owns the stock of the Federal Reserve Banks? 

A: The dynastic families of the ruling World Order, internationalists who are 
loyal to no race, religion, or nation. They are families such as the 
Rothschilds, the Warburgs, the Schiffs, the Rockefellers, the Harrimans, the 
Morgans and others known as the elite, or "the big rich". 

Q: Can I buy this stock? 

A: No. The Federal Reserve Act stipulates that the stock of the Federal 
Reserve Banks cannot be bought or sold on any stock exchange. It is passed 
on by inheritance as the fortune of the "big rich". Almost half of the owners 
of Federal Reserve Bank stock are not Americans. 



Q: Is the Internal Revenue Service a governmental agency? 

A: Although listed as part of the Treasury Department, the IRS is actually a 
private collection agency for the Federal Reserve System. It originated as the 
Black Hand in mediaeval Italy, collectors of debt by force and extortion for 
the ruling Italian mob families. All personal income taxes collected by the 
IRS are required by law to be deposited in the nearest Federal Reserve Bank, 
under Sec. 15 of the Federal Reserve Act, "The moneys held in the general 
fund of the Treasury may be ....deposited in Federal reserve banks, which 
banks, when required by the Secretary of the Treasury, shall act as fiscal 
agents of the United States. " 

Q: Does the Federal Reserve Board control the daily price and quantity of 
money? 

A: The Federal Reserve Board of Governors, meeting in private as the 
Federal Open Market Committee with presidents of the Federal Reserve 
Banks, controls all economic activity throughout the United States by issuing 
orders to buy government bonds on the open market, creating money out of 
nothing and causing inflationary pressure, or, conversely, by selling 
government bonds on the open market and extinguishing debt, creating 
deflationary pressure and causing the stock market to drop. 

Q: Can Congress abolish the Federal Reserve System? 

A: The last provision of the Federal Reserve Act of 1913, Sec. 30, states, "The 
right to amend, alter or repeal this Act is expressly reserved. " This language 
means that Congress can at any time move to abolish the Federal Reserve 
System, or buy back the stock and make it part of the Treasury Department, 
or to altar the System as it sees fit. It has never done so. 

Q: Are there many critics of the Federal Reserve beside yourself? 

A: When I began my researches in 1948, the Fed was only thirty-four years 
old. It was never mentioned in the press. Today the Fed is discussed openly in 
the news section and the financial pages. There are bills in congress to have 
the Fed audited by the Government Accounting Office. Because of my 
expose, it is no longer a sacred cow, although the Big Three candidates for 
President in 1992, Bush, Clinton and Perot, joined in a unanimous chorus 
during the debates that they were pledged not to touch the Fed. 

Q: Have you suffered any personal consequences because of your expose of 
the Fed? 

A: I was fired from the staff of the Library of Congress after I published this 
expose in 1952, the only person ever discharged from the staff for political 
reasons. When I sued, the court refused to hear the case. The entire German 
edition of this book was burned in 1955, the only book burned in Europe 
since the Second World War. I have endured continuous harassment by 



government agencies, as detailed in my books "A WRIT FOR MARTYRS" 
and "MY LIFE IN CHRIST". My family also suffered harassment. When I 
spoke recently in Wembley Arena in London, the press denounced me as "a 
sinister lunatic". 

Q: Does the press always support the Fed? 

A: There have been some encouraging defections in recent months. A front 
page story in the Wall Street Journal, Feb. 8, 1993, stated, "The current Fed 
structure is difficult to justify in a democracy. It's an oddly undemocratic 
institution. Its organization is so dated that there is only one Reserve bank 
west of the Rockies, and two in Missouri...Having a central bank with a 
monopoly over the issuance of the currency in a democratic society is a very 
difficult balancing act. " 

Congressman McFadden on the Federal Reserve Corporation Remarks in 
Congress, 1934 



AN ASTOUNDING EXPOSURE 
http://home.hiwaay.net/%7Ebecraft/mcfadden.html 

The Bankruptcy of the United States 
http://www.apfn.net/Doc-100_bankruptcy.htm 

The Fed, The Fed, The Fed 
http://www.gold-eagle.com/editorials_01/sennholz040301.html 

The Declaration of Independence 

http : //www, apf n. or g/apf n/declar ation. h tm 

The Federal Reserve - What Is It? Who Is It? 
http://www.the-oil-patch.com/archive/federal-reserve.html 

The Coming Battle (The Book) 
http://www.apfn.org/apfn/comingbattle.htm 

The United Nations plans to CONFISCATE your profit and - 

http : //www, apf n. or g/apf n/united nations.htm 

The 545 People Responsible For All of America's Woes 

http://www.apfn.org/apfn/woes.htm 

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